Computer system for producing an illustration of an investment repaying a mortgage

ABSTRACT

A computerized system for initiating, processing, preparing, storing, and transmitting illustrations of life insurance in conjunction with a mortgage, the illustrations being devoid of a cost containment clause. A computer accesses a database into which data is written and from which data is read, the data including information regarding the life to be insured, general applicant information, insurance information, mortgage information, and predetermined text data for incorporation into insurance illustrations. The computer is operable by connecting to the database and at least one PC, including input and display apparatus, to permit data to be entered in and retrieved from the database. The computer is also provided with the capability of merging entered or stored data with the predetermined text data to compile the data and text into output embodying an illustration of life insurance in conjunction with a mortgage for the home buyer.

I. BACKGROUND OF THE INVENTION

A. Technical Field of the Invention

This invention concerns an electrical computer and a data processingsystem, and methods involving the same, applied to the financial fieldsof insurance and mortgages. More particularly, this invention relates toa computer system for preparing, processing and transmitting lifeinsurance premium quotes as part of a mortgage calculation in support ofa new financial product. In the new financial product, life insurance isused as collateral and a means for repayment of a mortgage, andfacilitates the purchase of real estate without (or with a greatlyreduced) down payment. The invention includes automated aspects of theuse of premiums paid on life insurance as a substitute for the initialdown payment on a mortgage, the use of life insurance policy deathbenefits to retire the mortgage upon the death of the borrower, the useof accumulated cash values to retire the outstanding principal on amortgage in the event of the borrower's survival, and the services ofstorage and transmission of data for all of the foregoing.

B. Description of the Background Art

In the United States, the declining supply of low-cost housing and theinability of many low-income renters to save enough money to make a downpayment has forced many potential home buyers out of the housing market,according to a study released Mar. 17, 1988, by the Harvard UniversityJoint Center for Housing Studies. (Reported in the Mar. 28, 1988, Bureauof National Affairs Banking Report.) To address this problem in theUnited Kingdom, a way has been found to combine life insurance and amortgage into what is known as an "endowment mortgage."

A UK endowment mortgage is a balloon payment mortgage combined with anendowment life insurance contract. A UK endowment life insurance policyprovides life insurance coverage and tax-free accumulation of premiumdollars invested in the life insurance policy over a stipulated timeperiod--usually between twenty and forty years. The lender and theinsurance company work in concert to engineer a balloon payment mortgagelinked to an endowment life insurance policy so that, at the end of themortgage period, the cash value accumulated via the life insurance issufficient to repay the mortgage in a single, lump-sum "balloon"repayment.

A home buyer financing the purchase of a home with a UK endowmentmortgage pays no principal to the lender over the term of the mortgage.Monthly loan payments are limited to interest only. The mortgageprincipal is repaid separately by using the life insurance policy. Thisprincipal accumulates in an endowment life insurance policy--a universallife insurance policy with a level death benefit equal to the purchaseprice of the home. The premium dollars invested grow over the term ofthe mortgage to meet the amount of the principal borrowed to purchasethe home. In the last year of the mortgage, the life insurance policy"endows," and the homeowner uses a one-time tax-free distribution fromthe life insurance policy to repay the mortgage.

The endowment mortgage has numerous advantages to UK borrowers andlenders. First, it is more tax-efficient for borrowers than aconventional amortization mortgage. This is because monthly paymentsinclude only interest and are therefore 100 percent tax deductible.Second, principal payments, made in the form of premium payments to theendowment policy (less the cost of mortality and insurance charges),accumulate tax free. This causes endowment policy assets to grow morerapidly, and in turn allows lenders to lower the amount of the requireddown payment. Third, it is a more secure lending vehicle for the lender.The lender has collateral rights to both the mortgaged property and theinsurance policy. Fourth, because of the insurance component of theendowment mortgage, the homeowner has built-in security that so long ashe or she maintains the mortgage payments, the survivors will inheritthe mortgaged property free of the mortgage.

Subsequent generations of products have expanded on the endowmentmortgage concept in the UK. Derivative versions of the product includethe so-called Pension Mortgage and Personal Equity Plan (PEP) Mortgage.Both products link the UK equivalent of an Individual Retirement Accountor Keough Account, term insurance, and a balloon payment mortgage. Thesefinancial products include all of the characteristics of an endowmentmortgage (full deductibility of mortgage interest payments, lifecoverage, and tax-free accumulation of principal). The term insuranceprovides the life coverage component of the endowment mortgage, thePension or PEP provides the tax-free accumulation of principal, and theballoon payment mortgage provides fully deductible loan interest. Inaddition, both the PEP and Pension mortgages have the additional benefitof offering at least a partially deductible principal repayment. BothPEP and Pension contributions are tax-deductible up to certain limits.

Endowment mortgages dominate the residential mortgage market in the UK.For example, approximately 82 percent of all mortgages underwritten inthe UK in 1988 were endowment, pension, or PEP type mortgages.Conventional amortization type mortgages, similar to those commonlyavailable in the United States, are also available in the UK, but theseaccounted for only 18 percent of new mortgage sales in 1988.

Despite their great success in the UK, endowment type mortgages have notsimilarly dominated the United States residential mortgage market,apparently largely due to the different laws of each nation. In theUnited States, federal statutes forbid most lenders from selling lifeinsurance. Also, most states have laws forbidding tie-in sales ofmortgages. A tie-in sale occurs when a lender insists that a borrowerbuy a particular insurance product from a particular life insurancecompany. Legal impediments also exist for life insurers wishing to lendmoney as an inducement to sell insurance. Further, in the United Statesthe tax treatment of life insurance is different from that in the UnitedKingdom. In the United States, policyowners must pay taxes on policydistributions in excess of the basis (for US tax purposes, the basis isequal to cumulative premium payments) in the contract. In the UK,distributions from endowment type insurance contracts are tax free.

Thus, in the US there is a unique problem of how to lawfully combine amortgage and life insurance and additionally make a viable financialproduct. Accordingly, it is not surprising that computer systems toillustrate such a financial product have been lacking in the UnitedStates.

A proposal to combine life insurance and a mortgage, implemented bymeans of a computer system, has been made in U.S. Pat. No. 4,876,648,titled "System and Method for Implementing and Administrating a MortgagePlan" (Charles Lloyd) (hereinafter "LLOYD"), issued on Oct. 24, 1988.Under LLOYD's mortgage scheme, as it is presently understood, each yearthe lender charges some percent over the standard interest rate to coverthe cost of insurance premiums ($100,000×1%=$1,000 in LLOYD's example).These insurance premium payments buy an insurance policy that is ownedby the lender as the means by which the mortgage principal is repaid. Atfive-year intervals, the homeowner may receive a rebate of this extrainterest paid (and deducted) by exercising a cost containment clause. Atthe execution of this clause, the lender makes a distribution equal tothe policy premiums to the homeowner. For example, in year 20, thedistribution would be equal to $20,000 for a total of 20 annual premiumsof $1,000. By exercising the cost containment clause to obtain the$20,000 distribution and using that distribution to buy the lifeinsurance policy from the lender at the lender's basis in the policy,$20,000, the homeowner can pay down the mortgage. That is, the homeownernow owns an insurance policy with a cash value of $40,648, which may beused to pay down the mortgage.

However, there are a number of significant problems with the LLOYDapproach. These problems seem to center on the mechanism for getting themoney out of the insurance policy to retire the mortgage, i.e., the costcontainment clause. One significant problem that may be real orperceptual is the possibility that the financial product could be viewedas constituting an unlawful discrimination based on age and sex. Thatis, if the lender builds the cost of the policy premium into themortgage interest rate, then there will be the appearance of chargingdifferent interest rates to different individuals based on their age andsex. Such pricing differences are lawful in a life insurance transactionbecause these factors relate to the insurance risk. But age and sexdiscrimination in lending is generally forbidden under the Equal CreditOpportunity Act, 15 U.S.C. §1691(a)(1), which provides that "It shall beunlawful for any creditor to discriminate against any applicant withrespect to any aspect of a credit transaction--(1) on the basis of race,color, religion, national origin, sex or marital status, or age . . . ."

It remains undecided whether a court would view the higher interest ratecharged as an interest payment, and therefore subject to the regulationsregarding equal treatment for all borrowers with the same credit rating,or as an insurance premium. Nonetheless, there may be a perception thatthere is some risk that whoever attempts to sell the LLOYD financialproduct would be sued and would lose, and the penalties for unlawfulinterest rate discrimination are considerable: 15 U.S.C. §1691(e)(a)provides for class action suits; subsection (b) provides for punitivedamages; and subsection (c) provides for recovery of attorney fees andcosts. In the end, though, the perception of discrimination may be thereal Achilles heel of the LLOYD financial product, as the lender wouldhave to offer different rates based on age and sex.

Another drawback of the LLOYD approach is that it has potentiallyadverse tax consequences. It is unclear if the incremental interest inthe LLOYD financial product is tax deductible as home mortgage interestor non-tax deductible as an insurance policy premium payment. That is,if the homeowner has taken a deduction for the incremental interest paidof $1,000 per year over the term of the mortgage, and the costcontainment clause is exercised, it is not clear what the tax treatmentof the rebate would be. Certainly the IRS will not permit the homeownerto take a deduction for an interest payment for money that is laterrebated, and LLOYD acknowledges the possibility of a tax problem withhis financial product. See Col. 16, lines 6-20.

For example, in order to buy the policy from the lender at its cost of$20,000, the LLOYD homeowner will have to pay the difference between thecost of the policy and the after-tax proceeds from the interest rebate.This amounts to about $14,000, assuming that the individual is in a 30percent tax bracket.

Still another drawback to the LLOYD approach is its lack of flexibility.While LLOYD mentions the use of variable and fixed rate mortgages theborrower makes only fixed cost containment clause payments, and thereexists no mechanism for adjusting the amount of the payments in theevent of declining interest rates. The borrower is therefore financingthe repayment of a fixed obligation (i.e., the mortgage) with a variableasset (i.e., an interest-sensitive universal life insurance policy).Thus, in the event of declining interest rates, there is no assurancethat the cash value accumulated in the cost containment clause will besufficient to completely repay the mortgage. Furthermore, if theindividual wants to sell the home at any time other than at the precisefive-year intervals required by the cost containment clause, he or shewill lose the value of the incremental interest payments. It isundoubtedly cumbersome to have to retire the mortgage (i.e., exercisethe cost containment clause) "only during the fifth, tenth, fifteenth,etc., years of the mortgage." See LLOYD at Col. 7, line 47-Col. 8, line6.

Yet another problem with the LLOYD approach is that, under somecircumstances, it appears that the lender may end up with either theincremental insurance payments or the insurance policy after themortgage is retired. For example, if the home buyer missed the 30-daydeadline required for the cost containment clause anniversary in year20, even if the home buyer happens to have $20,000 and buys the policyoutright, he or she will receive a policy worth $60,648. But because thehome buyer has already invested $20,000 over the previous twenty years,the lender is $20,000 richer, and the homeowner $20,000 poorer, for theexchange.

In addition, there appears to be a potential problem with the approachof LLOYD under circumstances where the mortgage is paid off with cash,such as when the mortgaged property is sold. Assume a $100,000 mortgageis retired with cash at the end of the mortgage term. Under LLOYD, theborrower apparently must pay an additional $30,000 to purchase theinsurance policy from the lender.

This is not to say that the financial product proposed in LLOYD is notworthwhile. Rather, LLOYD provides an excellent example of thedifficulty in linking a mortgage and an insurance product under thepresent laws of the United States on a commercially feasible basis.

In sum, then, United States laws (which define a US mortgage) and otherobstacles have seemingly prevented a mortgage/insurance type productfrom being sold. Despite great success of the endowment type mortgage inthe United Kingdom, despite billions of dollars lost in bad real estateloans and many collapsed lenders in the United States, despite thecreative prowess of the US financial industry which has tried and failedto successfully develop and sell anything resembling a UK endowment typeprogram in the US, the problem remained unsolved: "for some renterslonging to enter the housing market, the likelihood of coming up with adown payment may seem like a pie-in-the-sky notion." (Chicago Tribune,Jan. 24, 1992.) It remained for the present inventors to find asolution.

II. OBJECTS OF THE PRESENT INVENTION

Therefore it is an object of the present invention to provide acomputerized investment and mortgage payment calculation system whichovercomes the previously mentioned disadvantages and limitations of theprior art.

A further object of this invention is to provide a computerizedinvestment and mortgage illustration system, and a method of operatingthat system, in which a standardized illustration request form is filledout electronically for the purposes of providing a mortgage quote and aninvestment quote, and a means for computing mortgage and investmentpayments in conformity with those quotes.

An additional object of this invention is to provide a computerizedinvestment and mortgage illustration system which uses a centralcomputer to provide information concerning a mortgage using aninvestment as collateral and as a means for repaying the mortgage.

Another object of this invention is to provide a computer system forproducing a printed illustration document which will permit comparisonof the innovative financial product with other loan products.

Yet another object of this invention is to provide a computer systemincorporating a central database into which data representing differentlenders' mortgage rates is written and from which data is read in orderto provide an illustration of a mortgage collateralized by an investmentwhich is most suitable to the borrower's needs.

Still another object of this invention is to provide a computer systemincorporating a central database into which data regarding differentcarriers' life insurance policies is written and verified by each suchcarrier authorized for retrieval thereof and from which is read datamaking up an illustration proposal of a mortgage backed by a lifeinsurance policy which is most suitable to the borrower's needs givenunderwriting and policy requirements.

Still another object of the invention is to provide a computer systemincorporating a central database accessible via modem capable of storingand transmitting locally applicable mortgage and insurance quotes on anational basis.

Still another object of this invention is to provide a computerizedinsurance and mortgage illustration system capable of showing theprojected annual accumulation of life insurance cash values that (undercurrent interest and mortality charge assumptions under a given lifeinsurance carrier's life contract and authorized projections thereof)will provide collateral for a mortgage and which will eventually pay offthat mortgage with the after-tax proceeds from surrendering theinsurance policy after a stipulated period.

Still another object of this invention is to provide a computerizedinsurance and mortgage illustration system capable of showing theprojected annual accumulation of life insurance cash values that (undercurrent interest and mortality charge assumptions under a given lifeinsurance carrier's life contract and authorized projections thereof)will provide collateral for a mortgage and which will eventually pay offthat mortgage with the proceeds from a life insurance policy loan aftera stipulated period.

Still another object of this invention is to provide a computerizedinsurance and mortgage illustration system capable of showing theprojected annual accumulation of life insurance cash values that (undercurrent interest and mortality charge assumptions under a given lifeinsurance carrier's life contract and authorized projections thereof)will provide collateral for a mortgage and which will eventually pay offthat mortgage with the proceeds from life insurance policy deathbenefits.

Still another object of this invention is to provide a computerizedinsurance and mortgage illustration system capable of showing theprojected annual accumulation of life insurance cash values that (undercurrent interest and mortality charge assumptions under a given lifeinsurance carrier's life contract and authorized projections thereof)will provide collateral for a mortgage and which will eventually pay theinterest on that mortgage with the proceeds from life insurance policyloans after a stipulated period.

Still another object of this invention is to provide a computerizedinsurance and mortgage illustration system capable of showing the annualdeath benefit amount which will provide for the payment of the remainingprincipal owed in each year over the stipulated term of the mortgage.

Still another object of this invention is to provide a computerizedinsurance system capable of identifying potentially higher riskindividuals and providing specialized insurance values for thoseindividuals in an illustration of a mortgage using life insurance cashvalues as collateral.

Still another object of this invention is to provide a computerizedinsurance and mortgage illustration system incorporating a centraldatabase into which data is written and from which such data is read, toprovide the prospective applicant with finally printed, individualized,loan and insurance application forms prepared from standardized textualmaterial in combination with the aforementioned information.

Other objects and advantages of the present invention will becomeapparent from the following summary of the invention, drawings, anddetailed description of the invention and its preferred embodiment.

III. SUMMARY OF THE INVENTION

In accordance with the broad, general objects of this invention, acomputerized investment and mortgage illustration system is provided foruse in illustrating and supporting an innovative financial product. Theinnovation involves a financial product using an investment other than adown payment (such as cash value life insurance) as collateral and arepayment means for a mortgage, preferably wherein the financial productis devoid of a cost containment clause. This can be accomplished, forexample, by having the borrower own an insurance policy and use thepolicy to secure the loan. In one embodiment (to which the presentinvention is not limited), a party other than the lender or insurer canillustrate a combination of life insurance and a mortgage preferablyselected from those of numerous lenders and insurers.

Accordingly, the present invention involves processing information in astandardized manner, preferably to package an individually selectedmortgage product with an individually selected investment product, theproducts each being selected from respective groups of such productsmade available by different suppliers. The packaging process tailors thefinancial product to the prospective applicant's particular needs.

The system can, for example, be owned and operated by a suitablylicensed national intermediary, for example, a broker or data processingcompany. The intermediary would work in conjunction with lenders,securities firms and life insurance companies (and their agents andrepresentatives) and with mortgage brokers to design, develop, anddistribute investment and mortgage products. The investment and mortgageproducts, when used in combination with one another, will providemortgages using an investment as supplemental collateral acceptable tolenders, mortgage insurers and endorsers, and investors in the secondarymarket for mortgages. The intermediary, operating nationally incooperation with lenders and utilizing the system provided by thisinvention, can facilitate the sale of the combined investment/mortgageproducts by providing authorized lawyers, real estate agents,accountants, financial consultants, relocation specialists, corporatebenefits advisors, or mortgage and/or life insurance agents andsecurities brokers with access to the system of this invention viaremote terminals. As compensation for its work in designing theproducts, maintaining the system, and administering new kinds ofsupplemental collateral made possible by the system, the intermediaryand user of the system would receive commissions for the sale ofinvestments or, when appropriate, would receive fees for servicesprovided.

Having a data processor or broker working in conjunction with lendersdiffers from past intermediaries both in the United States and theUnited Kingdom in that the system of this invention creates for thefirst time the capability of offering a number of different investmentand mortgage products which may be used in conjunction with one another.By bringing these disparate products together in a combined format thatis understandable to the end customer, the system permits the customerto have the benefit of access to a new composite mortgage instrumentwith supplemental security which would otherwise not be available,without encountering the aforementioned problems of the prior art.

A user of the system can be an employee of the aforementionedintermediary providing illustrations requested by individuals outside ofthat firm. Alternatively, a user of the system can be an individual whohas received special approval from the intermediary to use the system.

A central processing unit in a digital computer is at the heart of thesystem. The central processing unit can access a database into whichdata is written and from which data is read. That data includesinformation regarding life insurance, mortgage information, actuarialinformation, insurance premium information, and predetermined text datafor incorporation into the combined mortgage and insuranceillustrations. The computer system further includes informationcorresponding to requirements of laws and regulations governinginsurance and information on personal tax rates.

Plural terminals are provided for communicating with the centralprocessing unit, each terminal having input means, such as a keyboard,and a display, such as a cathode ray tube (CRT) or a video displayterminal (VDT). Each terminal is operable by a user to produce requestsand to enter information and/or retrieve information for writing intoand/or reading from the database via the central processing unit. Thecentral processing unit provides a means for enabling access to thedatabase in response to predetermined information entered at theterminal by the user and is suitably programmed to recognize particularauthorizations.

In accordance with one desirable aspect of the invention, informationregarding a life to be insured and other data needed to provideillustrations of a mortgage using life insurance as collateral for thatindividual is keyed into the central processing unit by a system userusing a keyboard at a video display terminal. To assist the user inentering the appropriate data, a series of data comprising a "form" isdisplayed on the user's terminal by the central processing unit, and theuser will normally proceed to enter pertinent information in the blanksprovided. This information constitutes such things as the potentialborrower's name and address, the amount of the mortgage requested, theamount of life insurance coverage required, the individual's personaltax rate, the number of points required by the lending institution, theindividual's age, sex, and health status, and any other informationnecessary in providing an illustration of a mortgage using lifeinsurance as collateral. This information is correlated via the centralprocessing unit, resulting in the generation of premium quotation andmortgage illustration information. This information is then displayed atthe user's terminal and can be printed out on the user's printer. Thus,in a matter of minutes, a prospective applicant is apprised ofinformation pertinent to the mortgage such as (but not limited to) whatthe up-front payment and monthly payments would be for the mortgage iflife insurance is used as collateral.

Once data called for by the "form" is entered into the computer systemat the user's keyboard, a client information file or database record(hereinafter "client file") is established which will be variouslyupdated as the user conducts sensitivity analyses of the impact ofdifferent insurance and loan related assumptions on the ultimate amountof the up-front payment and the mortgage. Once the prospective applicantdecides to apply for a life insurance policy and loan, a final versionof the illustration is saved by the user in a master database file forlater retrieval and processing.

After input data has been compiled in a client fie, errors or omissionsin that data (e.g., the amount of requested insurance may be too high oromitted altogether, etc.) are detected. If these errors cannot becorrected immediately (for example, by supplying information fromanother file or record), further processing of the illustration requestis suspended and the need for additional information is reported.

In the event that the prospective applicant wishes to proceedimmediately to obtain the respective applications for the insurance andmortgage products, the system is capable of taking the informationstored in a final illustration database file, requesting a minimum ofinformation otherwise not required in the illustration process (such asthe prospective applicant's personal balance sheet information, whichtypically is required in the loan application form) and merging it withprepared textual information about the insurance and loan products togenerate printed application documents in a form acceptable to, andpreviously approved by, the lender and the insurance company. The systemalso permits the user to separately enter these forms and fill the formsout electronically. The application forms still require signature by theprospective applicant, however. When signed, these forms are sent, forexample, by mail or courier, to the lending institution and the systemowner/operator for further processing. Should the prospective applicantwish to have this process expedited, the user may send the informationon the signed forms electronically to a computer at the lendinginstitution and/or system owner/operator, facilitating processing inadvance of the receipt of the signed paper copies.

An alternative method for entering client data into the system, ratherthan by entering this data directly at a user's terminal, is to have theprospective applicant manually complete insurance and loan illustrationrequest forms which may or may not have been generated at the user'sterminal. The request form can be sent by mail or courier to the systemoperator and entered by the user into the computer system.

By means of the aforementioned computer system, this invention makes itpossible for the first time to offer the American consumer a US mortgagearrangement which will perform like the endowment mortgage available inthe United Kingdom. This mortgage/insurance financial product(referenced herein as the "Ryan Mortgage") has innovativecharacteristics uniquely suited to the US legal environment, but withoutthe drawbacks of LLOYD. Unlike LLOYD, the Ryan Mortgage is typically nota single financial product necessarily offered by a single seller (e.g.,a lender). In a preferred embodiment, it is a combination of two or moredifferent financial products offered by different suppliers (i.e.,multiple lenders and multiple insurance carriers). Because the consumer,not the lender, is the owner of the life insurance policy, there is nocost containment clause in the Ryan Mortgage.

Also, the borrower owns the means for repaying the mortgage; theborrower may completely repay the mortgage without having to purchasethe means for repaying the mortgage from the lender. Like the UKproduct, the key components to the transaction may include: a balloonrepayment mortgage, life insurance coverage equal to the amount of themortgage, and a separate vehicle for accumulating principal. Vehiclesfor accumulating principal might include a universal life insurancecontract, an Individual Retirement Account, Keough Account, or zerocoupon bond.

This description will focus on a preferred embodiment of the inventionusing as an investment a universal life insurance policy, but it is tobe explicitly understood that other equivalent investments can be usedas a means for repaying the mortgage, e.g., term life insurance with azero coupon bond, IRA, Keough Account, or tax-deferred annuity, or someother (preferably tax-favored) means for producing secured revenue inconjunction with life insurance. Indeed, in another embodiment of thepresent invention, an investment for repaying the mortgage can beselected from any two or three of a group consisting of a life insurancepolicy, a security, and an annuity. Further, the mortgage repaymentvehicle can comprise a plurality of these investments selected from thegroup.

As in the UK, a purchaser of a Ryan Mortgage will enjoy fully deductiblemortgage interest payments over the life of the mortgage. Premiumpayments provide life insurance coverage, and tax-free growth ofprincipal for the repayment of the mortgage.

Unlike the UK product or a conventional US mortgage, the Ryan Mortgagecompletely or partially replaces the traditional mortgage down paymentwith an insurance purchase. For example, to purchase a $262,000 homerather than pay $52,400 (20% of the home purchase price) as a downpayment and borrow the remaining $209,600, the Ryan Mortgage home buyerpays $31,586 (12% of the home purchase price) to purchase a lifeinsurance contract and borrows $262,000, the full purchase price of thehome. The $31,586 life insurance investment provides paid up coveragefor the remainder of the borrower's life. The policy also accumulatessufficient cash value to repay the $262,000 balloon payment mortgageloan when it comes due, for example, in thirty years. The borrower paysonly monthly interest charges on the mortgage. Monthly mortgage paymentsdo not include principal repayment. Monthly mortgage payments are onehundred percent tax deductible over the life of the mortgage. (SeeSpecimen 2.)

Normally lenders are reluctant to provide financing for one hundredpercent of the purchase price of a home and are unwilling to wait untilthe end of the mortgage for the repayment of principal. However, underthe Ryan Mortgage, the lender has additional security: the real estateplus the insurance.

The Ryan Mortgage offers the borrower at least two premium paymentmethods. The first is a lump-sum prepayment. With a lump-sum prepayment,the home buyer deposits an amount sufficient to pay the first scheduledpremium. He or she also deposits enough money to purchase an annuitycontract that will pay three annual premium payments (for example) forthe second through fourth years of the life insurance contract. Forexample, of the $31,586 payment described above, $8,916.16 would go topay the first scheduled premium payment and $22,669.84 would go topurchase an annuity at the date of the mortgage closing. Over the nextthree years, the annuity will make the premium payment of $8,916.16 onthe anniversary of the mortgage transaction. After making his or herlump-sum payment, the home buyer normally makes no further premiumpayments. While interest rates remain at or above the rate projected,these premium payments will be sufficient to ensure that the lifeinsurance contract remains in force over the life of the mortgage. Thepremium is also large enough to assure that the policy will accumulatesufficient cash value to repay the mortgage by the end of the mortgageterm. Normally, the lump-sum prepayment needed will be less than twentypercent of the purchase price of the home. (The standard down paymentamount of a conventional home purchase is twenty percent of the purchaseprice.) Also, the after-tax monthly cost of the all-interest monthlymortgage payments will typically be less than or equal to the cost of aconventional mortgage with a similar down payment amount.

The second premium payment method involves the participation of aguarantor. A guarantor could be an employer wishing to provide a benefitfor its employees to relocate for business purposes. Also, a guarantorcould be a lender providing an irrevocable letter of credit in exchangefor a fee. The guarantor provides financial assurances to the lenderthat the home buyer will make the annual insurance payments. In aguaranteed transaction, the homeowner's premium payment would usually beless than five percent of the purchase price of the home. For example,ten annual premium payments of $4,700.70 could provide adequate cashvalue to pay off the $262,000 mortgage obligation in the last year ofthe mortgage. A guarantor arrangement allows the home buyer to make adrastically reduced up-front payment. In this example, the first of tenannual premium payments, $4,700.70, amounts to 1.79% of the $262,000home purchase price. However, the transaction will require the homebuyer to make, for example, nine additional premium payments in upcomingyears. These insurance payments are divided into monthly payments andpaid into an escrow account. Thus, in the first years, the monthly costto the prospective applicant will include these amounts which mayinflate the Ryan Mortgage cost versus the conventional mortgage. Sincethe insurance premiums are typically lower for younger individuals, theRyan Mortgage will be most attractive to that kind of person. Youngerindividuals, such as first time home buyers, are also the ones mostlikely to need the smallest possible up-front payment. (See Specimen 5for sample system output.)

Under both premium payment plans, the borrower makes a collateralassignment of the policy to the lender or a third party endorser of themortgage, such as a federal mortgage endorsement agency or a privatemortgage insurance company. Under the terms of the collateral assignmentagreement, the assignee has claim to the life insurance contract untilthe borrower repays the mortgage. When the borrower repays the mortgage,title to the home and the insurance policy vest in the borrower. If theborrower dies before the end of the mortgage term, the borrower's estatereceives tax-free life insurance death benefit proceeds after deductionof the amount required to repay the mortgage obligation.

Should the home be sold for an amount which permits the mortgage to bepaid out of the proceeds, the borrower will retain ownership of the lifeinsurance contract. Such a life insurance policy has many uses. Forexample, the policyholder may use the policy as supplemental collateralfor another mortgage and to replace the down payment in a subsequenthome purchase and mortgage transaction.

Alternatively, the homeowner may not want to enter another Ryan Mortgagetransaction. If so, he or she can keep the policy and take advantage ofthe many other benefits of a permanent life insurance policy. Apolicyholder may use the life insurance policy as a savings vehicle, asource of additional life insurance coverage, a source of cash for otherobligations, or a means of financing retirement benefits. For example,the policyholder may pay additional premiums and enjoy tax-freeaccumulation of the invested principal. The policyholder may elect toreduce his or her coverage and withdraw cash from the policy via partialwithdrawals or policy loans. Policy distributions can be used to pay formajor expenses such as a new car, a medical emergency, or collegetuition payments for children. If the policyholder no longer needs lifeinsurance coverage, the policyholder can enter into a tax-free exchangeof the life insurance policy. For example, the policyholder can exchangethe life insurance policy for an annuity that provides monthly income inretirement.

The Ryan Mortgage has other unique features designed to maximize benefitto the consumer and minimize the after-tax cost of financing themortgage. The homeowner may repay the mortgage in one of at least threeways at the end of the mortgage term. First, the homeowner may surrenderthe life insurance contract and use the proceeds of the policy surrenderto pay off the mortgage. Under US tax law, presently, the policyholdermust pay taxes on the interest income accumulated over the basis in thecontract in the event of policy surrender. However, the policyholderwill have had the benefit of tax-deferred accumulation of interest onthe principal for up to forty years. Normally, cash value accumulated bythe end of the mortgage will be sufficient to both repay the mortgageand pay the taxes on interest earnings.

Second, the homeowner may use a policy loan to pay off the mortgage.Life insurance contracts typically permit policyholders to borrowagainst the cash value of the life insurance policy. A policy loandiffers from a mortgage or other loan from a lender in that the policyloan is non-recourse debt. The insurance company, in issuing the policyloan, has recourse only to the life insurance policy cash value. Undersome policy loan provisions, as long as the policy cash value exceedsthe policy loan balance, the policyholder need never pay interest on theloan, or repay the policy loan balance. When the policyholder dies, thepolicy loan is deducted from the policy death benefit and the insurancecompany will pay the net death benefit remaining to the policyholder'sestate.

The advantage of a policy loan over a policy surrender has to do withthe income tax effects of the two transactions. Proceeds from policysurrenders which are in excess of the basis (premiums) represent taxableincome to the policyholder. On the other hand, policy loans are nottaxable income to the recipient. Therefore, by using a policy loan torepay the mortgage, the homeowner can simply hold the policy untildeath. Using this method, the policyholder never has to pay taxes on theaccumulated interest earned in the life insurance contract.

A third option may be available to the homeowner with a good creditrecord during the life of the mortgage. The homeowner may roll over themortgage in the last year and hold it until death. By using lifeinsurance policy loans at the beginning of each year to pay the annualmortgage interest, the policyholder keeps more money in the lifeinsurance contract and maintains a higher death benefit than if themoney had been used to pay off the mortgage immediately. This approachalso allows the homeowner to maintain tax-deductible mortgage interestpayments in retirement.

IV. BRIEF DESCRIPTION OF THE FIGURES, SCREENS, VARIABLES, AND SPECIMENS

The following description, given by way of example and not intended tolimit the present invention solely to the described embodiments, will bebest understood in conjunction with the accompanying drawings, thecomputer or "user" screens, and specimens incorporated herein.

A. Figures

FIG. 1 is a schematic representation of the computerized insurance andmortgage illustration system of the present invention.

FIG. 2 represents a schematic flow chart of the logic behind the "mainmenu" (or user screen with a list of the functional choices that thecomputerized system provides to users) of the present invention.

FIG. 3 depicts the logic behind the illustration function of the presentinvention.

FIG. 3A-1 represents a schematic flow chart of the logic used in makingstandardized or "generic" illustrations designed to provide potentialpurchasers with examples of how the life insurance and mortgagecombination might perform, according to the present invention.

FIGS. 3B-1-3B-8 provide a flow chart of the logic used in calculatingand printing an individualized or "new" prospective applicantillustration tailored to the individual, and in creating a correspondingnew prospective applicant data file, in accordance with the presentinvention.

FIG. 3C-1 provide a flow chart of the logic used in changing or updatingan existing client data file for the purpose of providing theprospective applicant new illustrations based on assumptions whichdiffer from those originally illustrated, in accordance with the presentinvention.

FIG. 3D-1 represents a flow chart of the logic used in electronicallycompleting and/or printing a life insurance application form and storingthe information contained on the insurance application form in adatabase of the host computer for later retrieval, in accordance withthe present invention.

FIG. 3E-1 represents a flow chart of the logic used in electronicallycompleting and/or printing a mortgage loan application form and storingthe information contained on the mortgage loan application form in adatabase of the host computer for later retrieval, in accordance withthe present invention.

FIG. 3F-1 represents a flow chart of the logic used to access the hostcomputer for, and/or print out information regarding, new insuranceproduct developments.

FIG. 3G-1 represents a flow chart of the logic used to access the hostcomputer for, and/or print out information regarding, current loan ratesand other mortgage-product related information.

FIGS. 3H-1-3H-2 provide a flow chart of the logic used in recalculatinga homeowner's mortgage and premium payments in a given year after themortgage transaction has been completed.

FIGS. 4-35C are schematic representations of the relationships betweenvarious data entities (database tables) within the database system ofthe present invention.

FIG. 5 is a representation of a computer user screen, User Screen 1, inaccordance with the present invention.

FIG. 6 is a representation of a computer user screen, Screen 2 inaccordance with the present invention.

FIG. 7 is a representation of a computer user screen, Screen 3 inaccordance with the present invention.

FIG. 8 is a representation of a computer user screen, Screen 4 inaccordance with the present invention.

FIG. 9 is a representation of a computer user screen, Screen 5 inaccordance with the present invention.

FIG. 10 is a representation of a computer user screen, Screen 6 inaccordance with the present invention.

FIG. 11 is a representation of a computer user screen, Screen 7 inaccordance with the present invention.

FIG. 12 is a representation of a computer user screen, Screen 8 inaccordance with the present invention.

FIG. 13 is a representation of a computer user screen, Screen 9 inaccordance with the present invention.

FIG. 14 is a representation of a computer user screen, Screen 10 inaccordance with the present invention.

FIG. 15 is a representation of a computer user screen, Screen 11 inaccordance with the present invention.

FIG. 16 is a representation of a computer user screen, Screen 12 inaccordance with the present invention.

FIG. 17 is a representation of a computer user screen, Screen 13 inaccordance with the present invention.

FIG. 18 is a representation of a computer user screen, Screen 14 inaccordance with the present invention.

FIG. 19 is a representation of a computer user screen, Screen 15 inaccordance with the present invention.

FIG. 20 is a representation of a computer user screen, Screen 16 inaccordance with the present invention.

FIG. 21 is a representation of a computer user screen, Screen 17 inaccordance with the present invention.

FIG. 22 is a representation of a computer user screen, Screen 18 inaccordance with the present invention.

FIG. 23 is a representation of a computer user screen, Screen 19 inaccordance with the present invention.

FIG. 24 is a representation of a computer user screen, Screen 20 inaccordance with the present invention.

FIG. 25 is a representation of a computer user screen, Screen 21 inaccordance with the present invention.

FIG. 26 is a representation of a computer user screen, Screen 22 inaccordance with the present invention.

FIG. 27A, which continues through FIG. 27E, represents a portion of anexample of a printed specimen, Specimen 1, in accordance with thepresent invention.

FIG. 27B is a continuation from FIG. 27A and represents a portion of anexample of a printed specimen, Specimen 1, in accordance with thepresent invention.

FIG. 27C is a continuation from FIG. 27A and represents a portion of anexample of a printed specimen, Specimen 1, in accordance with thepresent invention.

FIG. 27D is a continuation from FIG. 27A and represents a portion of anexample of a printed specimen, Specimen 1, in accordance with thepresent invention.

FIG. 27E is a continuation from FIG. 27A and represents a portion of anexample of a printed specimen, Specimen 1, in accordance with thepresent invention.

FIG. 28A, which continues through FIG. 28J, represents a portion of anexample of a printed specimen, Specimen 2, in accordance with thepresent invention.

FIG. 28B is a continuation from FIG. 28A and represents a portion of anexample of a printed specimen, Specimen 2, in accordance with thepresent invention.

FIG. 28C is a continuation from FIG. 28A and represents a portion of anexample of a printed specimen, Specimen 2, in accordance with thepresent invention.

FIG. 28D is a continuation from FIG. 28A and represents a portion of anexample of a printed specimen, Specimen 2, in accordance with thepresent invention.

FIG. 28E is a continuation from FIG. 28A and represents a portion of anexample of a printed specimen, Specimen 2, in accordance with thepresent invention.

FIG. 28F is a continuation from FIG. 28A and represents a portion of anexample of a printed specimen, Specimen 2, in accordance with thepresent invention.

FIG. 28G is a continuation from FIG. 28A and represents a portion of anexample of a printed specimen, Specimen 2, in accordance with thepresent invention.

FIG. 28H is a continuation from FIG. 28A and represents a portion of anexample of a printed specimen, Specimen 2, in accordance with thepresent invention.

FIG. 28I is a continuation from FIG. 28A and represents a portion of anexample of a printed specimen, Specimen 2, in accordance with thepresent invention.

FIG. 28J is a continuation from FIG. 28A and represents a portion of anexample of a printed specimen, Specimen 2, in accordance with thepresent invention.

FIG. 29A, which continues through FIG. 29L, represents a portion of anexample of a printed specimen, Specimen 3, in accordance with thepresent invention.

FIG. 29B is a continuation from FIG. 29A and represents a portion of anexample of a printed specimen, Specimen 3, in accordance with thepresent invention.

FIG. 29C is a continuation from FIG. 29A and represents a portion of anexample of a printed specimen, Specimen 3, in accordance with thepresent invention.

FIG. 29D is a continuation from FIG. 29A and represents a portion of anexample of a printed specimen, Specimen 3, in accordance with thepresent invention.

FIG. 29E is a continuation from FIG. 29A and represents a portion of anexample of a printed specimen, Specimen 3, in accordance with thepresent invention.

FIG. 29F is a continuation from FIG. 29A and represents a portion of anexample of a printed specimen, Specimen 3, in accordance with thepresent invention.

FIG. 29G is a continuation from FIG. 29A and represents a portion of anexample of a printed specimen, Specimen 3, in accordance with thepresent invention.

FIG. 29H is a continuation from FIG. 29A and represents a portion of anexample of a printed specimen, Specimen 3, in accordance with thepresent invention.

FIG. 29I is a continuation from FIG. 29A and represents a portion of anexample of a printed specimen, Specimen 3, in accordance with thepresent invention.

FIG. 29J is a continuation from FIG. 29A and represents a portion of anexample of a printed specimen, Specimen 3, in accordance with thepresent invention.

FIG. 29K is a continuation from FIG. 29A and represents a portion of anexample of a printed specimen, Specimen 3, in accordance with thepresent invention.

FIG. 29L is a continuation from FIG. 29A and represents a portion of anexample of a printed specimen, Specimen 3, in accordance with thepresent invention.

FIG. 30A, which continues through FIG. 30L, represents a portion of anexample of a printed specimen, Specimen 4, in accordance with thepresent invention.

FIG. 30B is a continuation from FIG. 30A and represents a portion of anexample of a printed specimen, Specimen 4, in accordance with thepresent invention.

FIG. 30C is a continuation from FIG. 30A and represents a portion of anexample of a printed specimen, Specimen 4, in accordance with thepresent invention.

FIG. 30D is a continuation from FIG. 30A and represents a portion of anexample of a printed specimen, Specimen 4, in accordance with thepresent invention.

FIG. 30E is a continuation from FIG. 30A and represents a portion of anexample of a printed specimen, Specimen 4, in accordance with thepresent invention.

FIG. 30F is a continuation from FIG. 30A and represents a portion of anexample of a printed specimen, Specimen 4, in accordance with thepresent invention.

FIG. 30G is a continuation from FIG. 30A and represents a portion of anexample of a printed specimen, Specimen 4, in accordance with thepresent invention.

FIG. 30H is a continuation from FIG. 30A and represents a portion of anexample of a printed specimen, Specimen 4, in accordance with thepresent invention.

FIG. 30I is a continuation from FIG. 30A and represents a portion of anexample of a printed specimen, Specimen 4, in accordance with thepresent invention.

FIG. 30J is a continuation from FIG. 30A and represents a portion of anexample of a printed specimen, Specimen 4, in accordance with thepresent invention.

FIG. 30K is a continuation from FIG. 30A and represents a portion of anexample of a printed specimen, Specimen 4, in accordance with thepresent invention.

FIG. 30L is a continuation from FIG. 30A and represents a portion of anexample of a printed specimen, Specimen 4, in accordance with thepresent invention.

FIG. 31A, which continues through FIG. 31J, represents a portion of anexample of a printed specimen, Specimen 5, in accordance with thepresent invention.

FIG. 31B is a continuation from FIG. 31A and represents a portion of anexample of a printed specimen, Specimen 5, in accordance with thepresent invention.

FIG. 31C is a continuation from FIG. 31A and represents a portion of anexample of a printed specimen, Specimen 5, in accordance with thepresent invention.

FIG. 31D is a continuation from FIG. 31A and represents a portion of anexample of a printed specimen, Specimen 5, in accordance with thepresent invention.

FIG. 31E is a continuation from FIG. 31A and represents a portion of anexample of a printed specimen, Specimen 5, in accordance with thepresent invention.

FIG. 31F is a continuation from FIG. 31A and represents a portion of anexample of a printed specimen, Specimen 5, in accordance with thepresent invention.

FIG. 31G is a continuation from FIG. 31A and represents a portion of anexample of a printed specimen, Specimen 5, in accordance with thepresent invention.

FIG. 31H is a continuation from FIG. 31A and represents a portion of anexample of a printed specimen, Specimen 5, in accordance with thepresent invention.

FIG. 31I is a continuation from FIG. 31A and represents a portion of anexample of a printed specimen, Specimen 5, in accordance with thepresent invention.

FIG. 31J is a continuation from FIG. 31A and represents a portion of anexample of a printed specimen, Specimen 5, in accordance with thepresent invention.

FIG. 32A, which continues through FIG. 32L, represents a portion of anexample of a printed specimen, Specimen 6, in accordance with thepresent invention.

FIG. 32B is a continuation from FIG. 32A and represents a portion of anexample of a printed specimen, Specimen 6, in accordance with thepresent invention.

FIG. 32C is a continuation from FIG. 32A and represents a portion of anexample of a printed specimen, Specimen 6, in accordance with thepresent invention.

FIG. 32D is a continuation from FIG. 32A and represents a portion of anexample of a printed specimen, Specimen 6, in accordance with thepresent invention.

FIG. 32E is a continuation from FIG. 32A and represents a portion of anexample of a printed specimen, Specimen 6, in accordance with thepresent invention.

FIG. 32F is a continuation from FIG. 32A and represents a portion of anexample of a printed specimen, Specimen 6, in accordance with thepresent invention.

FIG. 32G is a continuation from FIG. 32A and represents a portion of anexample of a printed specimen, Specimen 6, in accordance with thepresent invention.

FIG. 32H is a continuation from FIG. 32A and represents a portion of anexample of a printed specimen, Specimen 6, in accordance with thepresent invention.

FIG. 32I is a continuation from FIG. 32A and represents a portion of anexample of a printed specimen, Specimen 6, in accordance with thepresent invention.

FIG. 32J is a continuation from FIG. 32A and represents a portion of anexample of a printed specimen, Specimen 6, in accordance with thepresent invention.

FIG. 32K is a continuation from FIG. 32A and represents a portion of anexample of a printed specimen, Specimen 6, in accordance with thepresent invention.

FIG. 32L is a continuation from FIG. 32A and represents a portion of anexample of a printed specimen, Specimen 6, in accordance with thepresent invention.

FIG. 33A, which continues through FIG. 33L, represents a portion of anexample of a printed specimen, Specimen 7, in accordance with thepresent invention.

FIG. 33B is a continuation from FIG. 33A and represents a portion of anexample of a printed specimen, Specimen 7, in accordance with thepresent invention.

FIG. 33C is a continuation from FIG. 33A and represents a portion of anexample of a printed specimen, Specimen 7, in accordance with thepresent invention.

FIG. 33D is a continuation from FIG. 33A and represents a portion of anexample of a printed specimen, Specimen 7, in accordance with thepresent invention.

FIG. 33E is a continuation from FIG. 33A and represents a portion of anexample of a printed specimen, Specimen 7, in accordance with thepresent invention.

FIG. 33F is a continuation from FIG. 33A and represents a portion of anexample of a printed specimen, Specimen 7, in accordance with thepresent invention.

FIG. 33G is a continuation from FIG. 33A and represents a portion of anexample of a printed specimen, Specimen 7, in accordance with thepresent invention.

FIG. 33H is a continuation from FIG. 33A and represents a portion of anexample of a printed specimen, Specimen 7, in accordance with thepresent invention.

FIG. 33I is a continuation from FIG. 33A and represents a portion of anexample of a printed specimen, Specimen 7, in accordance with thepresent invention.

FIG. 33J is a continuation from FIG. 33A and represents a portion of anexample of a printed specimen, Specimen 7, in accordance with thepresent invention.

FIG. 33K is a continuation from FIG. 33A and represents a portion of anexample of a printed specimen, Specimen 7, in accordance with thepresent invention.

FIG. 33L is a continuation from FIG. 33A and represents a portion of anexample of a printed specimen, Specimen 7, in accordance with thepresent invention.

FIG. 34A, which continues through FIG. 34B, represents a portion of anexample of an application for life insurance, Specimen 8, in accordancewith the present invention.

FIG. 34B is a continuation from FIG. 34A and represents a portion of anexample of an application for life insurance, Specimen 8, in accordancewith the present invention.

FIG. 35A, which continues through FIG. 35C, represents a portion of anexample of a residential loan application, Specimen 9, in accordancewith the present invention.

FIG. 35B is a continuation from FIG. 35A and represents a portion of anexample of an application for life insurance, Specimen 9, in accordancewith the present invention.

FIG. 35C is a continuation from FIG. 35A and represents a portion of anexample of an application for life insurance, Specimen 9, in accordancewith the present invention.

B. User Screens

User Screens 1-22 provide a representative group of screens shown on amonitor or other output device and produced by means of the computersystem of the present invention. The User Screens can be seen by thesystem users as they prepare or update illustrations.

C. Variables, Identities, and Formulas

Variables, identities, and formulas which can be used throughout theillustration system are provided subsequently herein.

D. Specimens

Specimens 1-9 provide examples of printed product illustrations, a lifeinsurance application form, and a mortgage application form which can becreated by the present invention. The printed illustrations also includeprepared textual information explaining the use of life insurance ascollateral for a mortgage, life insurance policy information, mortgageinformation, and a comparison of these and other forms of financing.

Specimens 2-7 show an illustration of an investment, here exemplified asa life insurance policy, used as at least a partial replacement for adown payment, when contrasted with a conventional mortgage. (Anillustration is a printed or visual representation of estimated valueswhich permits a customer for or seller of a financial product tounderstand how that product will perform given a specified set ofassumptions.) This investment/collateral/mortgage repayment means isowned by the home buyer.

V. DETAILED DESCRIPTION OF A PREFERRED EMBODIMENT AND BEST MODE

A. Discussion of Figures (FIGs.) and User Screens

The following is a description of a preferred embodiment and best modeof the invention. The following includes a description of the manner inwhich the computerized insurance system of the present invention can bemade and used. Some of the unique insurance and mortgage transactionsthat are carried out by this system are described in detail. Othertransactions are described more generally. In the interest of brevity, ahighly detailed description of each and every one of the datatransactions that may be performed by the computerized system of thepresent invention is not provided. But based upon the detaileddescription of certain examples, and the knowledge of those familiarwith the life insurance industry and the mortgage lending industry, howto make and use the present invention should be readily apparent fromthe information provided herein.

Generally, in the computations underpinning the use of a mortgage inconjunction with life insurance as collateral, there is a computersystem for producing an illustration of an investment as a means forrepaying a mortgage. The system includes a digital computer forreceiving input data and for storing borrower information and investmentinformation. The digital computer is programmed with means, responsiveto the data, the borrower information, and to the investmentinformation, for computing an amount of investment funding sufficient torepay the mortgage and for generating an illustration of said investmentas a means for repaying the mortgage. Further, the computer system isdevoid of means for generating an illustration of a mortgage plan havinga cost containment clause.

More particularly, the computer system requests that a user input dataspecifying the kind of mortgage and the kind of insurance policy (e.g.,or some equivalent financial vehicle) to be illustrated. Thisinformation is stored in the computer's database system. Also, thecomputer is programmed to make calculations of loan and insurance valuesand other data needed for the illustration. When all the values havebeen computed and written to the database, the computer will thencombine them with text data to provide an illustration that can beprinted out. This information will also be stored in a database and maybe updated as needed.

Once the user, in consultation with a prospective borrower, hasdesignated the illustration as complete, data in the database can bemerged with stored text data and other input data in order to produceloan and insurance application forms. These forms can be printed out onthe user's printer for signature by the prospective applicant and forsubsequent processing by the system operator, the life insurancecarrier, and the lender.

FIG. 1 shows an overview of a data processing system for producing aninsurance policy/mortgage illustration according to the presentinvention. The Data Input Screen 2, discussed more fully hereinafter,can be produced on Terminal 4, for example an IBM compatible PC runningSmarterm 340 (available from Persoft Corp.), with a Local Printer 5,e.g., a laser printer. Terminal 4 is linkable to Communications System6. The Communication System 6 can be a modem and appropriate telephonelines. Communications System 6 is thus linkable to a Digital Computer 8,for example, a Digital Equipment Corporation VAX with a VMS operatingsystem, ORACLE, and WordPerfect (e.g., 5.1) from WordPerfectCorporation. Digital Computer 8 is operably connected to Central Printer9. The Digital Computer 8 contains a Central Processor 10 that isoperable to obtain Loan/Insurance Product Information 12, Loan RateInformation 14, and Insurance Premium Information 16. The respectiveinformation of Blocks 12, 14, and 16 can optionally be accessible online to other computers or stored as data in a System Database 17 of theDigital Computer 8.

Help 18 is a computerized system, preferably a context sensitive,hypertext-linked help system. Help 18 is available throughout theprogram.

Central Processor 10 is also operable to activate a function Print OutLoan/Insurance Application Forms on Central Printer 22, which points tothe function Fill In Forms 24 to selectively transmit Loan ApplicationData To Lender 26 and Life Insurance Application Data To Carrier 28.

Further, Central Processor 10 can generate an illustration via afunction Generate Illustration 30, which leads to Print Illustration OnLocal Printer 32. The generated illustration can be saved in theDatabase 17.

When the system is accessed, the user must choose the transactiondesired, and the selection will vary by the type of user. A managementlevel user with a higher level of authority can update the data used inthe illustration process. This data includes, but is not limited to: (1)current interest rates and other charges for loans offered by thelenders wishing to provide loans collateralized with life insurance; (2)insurance underwriting related values, including age, sex, and healthcharacteristics, premium amounts to be applied, cash value accumulation,annual death benefit amounts, and typical policy interest creditingrates and insurance charges; (3) all of the illustrations saved in theDatabase 17 which may be used for manipulation and analysis in both themarketing and underwriting functions carried out by an insurance agent,a carrier, and a lender; and (4) administrative messages from otherusers. Otherwise, a non-management user of the system has access to onlya portion of the system.

Prior to engaging the computerized aspects of the present invention, theuser should consult with the prospective applicant to obtain suchinformation as the prospective insured's age and sex, the amount of themortgage desired, the individual's ability or willingness to provide adown payment on the property, the individual's employment status,whether or not the individual has certain health problems which mayrequire specialized insurance underwriting, whether or not theindividual's employer is currently involved in a program that willguarantee the payment of policy premiums, etc. After thisinformation-gathering step has been completed, the user "logs" on atTerminal 4 by entering an assigned authorization password.

Turning now to FIG. 2, the user engages the system at Sign On To System34. Branch 36, Authorized To Use System?, checks the password againststored passwords to determine whether the user is authorized to use thesystem. If the user is not authorized, Block 38 displays a message onthe Terminal 4 that the user should telephone the system owner/operatorfor further information. If the user is authorized, meaning that thepassword is recognized by the Digital Computer 8, the logic continues toBranch 40. However, prior to Branch 40, there is a logic entry point X1,which is described more fully below, but which generally is a connectionfrom another part of the logic.

In any case, Branch 40 assesses the level of authority of the user fromthe password. In the present embodiment of the invention, there are twoalternatives. First, as previously suggested, the user could be a"Client User," in which case the logic connects to Illustration 42, asis subsequently discussed. Second, the user could be a "Super User,"having access to Main Menu 44.

The Client User/Super User authorization system is included in apreferred embodiment of this invention to avoid security problems whichwould otherwise be created by a diverse number of users using thesystem. It also provides for confidentiality of database informationand, in the case of communications between the system owner/operator andusers, allows each user to view only the information relating to theapplicants for whom the user is providing illustrations.

From the Main Menu 44, if the user does not yet wish to log off at Block48, there are a number of choices shown in User Screen 1.

The Main Menu 44 permits access to Illustration 42 used to create anillustration (Generic, New, or Existing). The user can also selectUpdate Database 50, which is described with particularity hereinafter,but which generally is a list of tables that can be updated. A typicalUpdate Database 50 screen is shown in User Screen 2.

The user can select Analyze 54 to access various reports and statisticson illustrations. Electronic Mail 52 permits electronic communicationbetween system users (see FIG. 1). Mail messages may be printed out viathe Printers 5 and 9.

Returning to FIG. 2, the Electronic Mall 52 function utilizes the VMSoperating system mail feature. The system has the ability to alert theuser that a message is present in his or her electronic "mail box." Thesystem is capable of reading these messages from that file onto theuser's screen, again allowing the user to move from screen-to-screen athis or her own speed. Once the user has completed a review of the data,one or all of the textual screens or "pages" may be printed at the LocalPrinter 5. The user may also write electronic messages to other users'mail boxes to be used in a similar manner.

At the completion of each subordinate function 42, 50, 52, 54, and 18,control is returned to the Main Menu 44 via the Return To Main MenuBlock 46.

Turning now to FIG. 3 where the logic proceeds from Illustration 42 ofFIG. 2, the user is presented with a Select Type Of Illustration 56submenu, shown as a portion of User Screen 1. Each of the functions ofthe submenu of Branch 56 will be presented in summary form here anddescribed subsequently in detail. One function is Generate GenericIllustration 58, which is elaborated by FIG. 3A-1. Generally, Function58 permits the user to quickly provide an illustration of how a mortgageusing life insurance as collateral might work for a standard mortgageamount. By limiting the number of variables and illustrating a standardamount, this Function 58 allows the user to quickly provide theprospective applicant with enough information to decide whether amortgage using life insurance as collateral might be of interest. Theinformation created in this Function 58 can be sent directly to theLocal Printer 5 for review by the prospective applicant.

A second function under Submenu 56 is Generate New ApplicantIllustration 60, which goes to FIG. 3B1. This Function 60 permits theuser to provide a detailed presentation, tailored to the prospectiveapplicant's own factual situation, of how a mortgage using lifeinsurance as collateral might perform for the prospective applicant.This Function 60 also allows the user to save the illustration for laterupdates and to send the illustration to the Local Printer 5 for reviewby the prospective applicant.

A third function of Submenu 56 is Update Existing Illustration 62, whichgoes to FIG. 3C-1. This Function 62 permits the user to update apreviously saved prospective applicant illustration using differentassumptions. This Function 62 also allows the user to quickly create anillustration which is different from one already saved by allowing theuser to change only those few items that the prospective applicant mayselect, thereby avoiding the laborious process of entering all of theinformation required to create a new prospective applicant illustration.This Function 62 likewise allows the user to save a new illustration forlater updates and to send the illustration to the Local Printer 5 topermit review by the prospective applicant.

Returning to FIG. 3, once the illustration has been compiled, the systempresents a sequence of further options. Print Life Insurance Application64, goes to FIG. 3D-1. This Function 64 allows the user to: (1) take theinformation generated and saved in the aforementioned illustrationprocess, add to it, and merge it with life insurance application formtext data to construct a customized, printed life insurance applicationform for signature; (2) electronically save in a file the customizedlife insurance application form; or (3) print out a partially completedor blank life insurance application form for later manual completion bythe prospective applicant.

Print Loan Application 66 goes to FIG. 3E-1. This Function 66 allows theuser to: (1) take the information generated and saved in theaforementioned illustration process, add to it, and merge it with loanapplication form text data to provide a customized, printed loanapplication form for signature; (2) electronically save in a file thecustomized loan application form; or (3) print out a partially completedor blank loan application form for later manual completion by theprospective applicant.

In another embodiment of the present invention, a Block can be added atthis point to perform the analogous function for a securities brokerageaccount application form to permit use of a security and/or an annuityas the investment to repay the mortgage.

Review Insurance Product Developments 68 goes to FIG. 3F-1. ThisFunction 68 allows the user to be quickly apprised of new developmentsin the insurance products used in forming the illustrations including,but not limited to, changes in interest rates credited by carriers oncash value reserves in the life insurance policies, new underwritingrules, new products provided by different carriers, etc. Thisinformation is available inside the Generate New Applicant Illustration60 and Update Existing Applicant Illustration 62 functions. Informationmay be read from the screen or printed out.

Review Loan Rates 70 goes to FIG. 3G-1. This Function 70 allows the userto be quickly apprised of current loan rates and other timely productinformation from lenders. This information coincides with the GenerateNew Applicant Illustration 60 and Update Existing Applicant Illustration62 functions. Information may also be read from the screen or printedout.

With further reference to FIG. 3, it should be noted that, in anotherembodiment of the present invention, the computer system is modified toaccommodate other species of investment for repaying the mortgage. Themodifications would include adapting FIG. 3, particularly Blocks 58, 60,and 62, to consider these additional investments. These otherinvestments can include, for example, joint or joint and survivor lifeinsurance, insurance (such as term insurance) in combination with anannuity or securities (for example, a zero coupon bond), an IndividualRetirement Account (IRA), or a Keough Account. In the interest ofbrevity, this application will not delve into each of these variationson the theme of a preferably tax-exempt repayment vehicle for serving aspartial down payment and the means for repaying the mortgage. A suitablyskilled computer programmer would recognize from the detaileddescription of the logic, user screens, specimens, and text discussionherein, that the logic would simply be modified to focus on distinctivefeatures of the other repayment vehicle(s). Thus, for example, thealternate embodiment of the computer system would be adapted to obtaindata and compute information sufficient for determining how and when therepayment vehicle will pay off the mortgage. The data can be obtained,for example, in a manner parallel to that described in Insurance PremiumInformation 16 or via modem, for example, from a plurality of stockbrokers. There would be means for generating an illustration of such aninvestment, along with investment implementing documentation, brokerageaccount applications, etc. Similarly, the logic described herein can bemodified to reflect different mortgage products. These can include fixedand variable rate mortgages with negative or positive amortization.While the fixed rate mortgages would be handled by means for computingfixed rate mortgage payments, an adjustable rate mortgage would be morecomplicated, having a means for computing extra amortization of mortgageprincipal when interest rates are low, and negative amortization wheninterest rates are high. The cash value accumulation can be treated asan offset to negative amortization.

Turning now to FIG. 3A-1, the Generate Generic Illustration 58 functionis illustrated. The Function 58 begins with User Screen 3 via Block 72,which asks the user to input the age and sex of the prospective client.A Ryan Mortgage involves the payment of monthly interest only on theloan, with repayment of principal at the end of the mortgage term.Conventional amortization mortgages, on the other hand, involve agradual repayment of principal over the term of the mortgage. Since apreferred embodiment of this invention involves the illustration of howaccumulated life insurance cash values may be used to pay off themortgage at the end of the mortgage term, the amount and timing of theprincipal repayment is an important variable in the presentation ofmortgage alternatives.

The specification of age and sex is appropriate, even for anillustration designed to show only average or hypothetical insurancevalues, i.e., values not entirely tailored to the individual prospectiveapplicant. This is because the statistical probability of the insured'sdeath (and hence the amount the insurance carrier must chargepolicyholders in order to have adequate reserves for the payment ofpolicy death proceeds) varies according to the age and sex of theindividual insured. This in turn has an important impact on how thepolicy is designed and has an ultimate bearing on the price and term forpolicy premium payments.

User Screen 3, via Block 72 in FIG. 3A-1, also asks the user to selectwhether the life insurance premiums are to be paid in a lump-sumprepayment, which is a single premium payment plus (at least) threepremiums prepaid with the purchase of an annuity. This minimum number ofpremium payments is required under present law to avoid treatment of thepolicy as a modified endowment contract. The system automaticallypreselects these amounts: (1) to assure that the policy conforms to UStax regulations and avoids modified endowment contract status under IRCSection 7702A(b) (thereby assuring that the policyholder avoids costlytax penalties in the event of policy surrender); and (2) to assure thatthe life insurance cash value will be sufficient to provide an amount ofcollateral which will be acceptable to prospective lenders.

In addition, User Screen 3, Block 72 in FIG. 3A-1, asks the user toselect the preferred mortgage repayment plan. Each plan offers distinctfinancial advantages to the prospective applicant and allows him or herto select the plan that best suits his or her needs.

Block 73 allows the user to modify any of the default generic data tomore closely parallel the prospective applicant's situation. This allowsfor a more personalized generic illustration, without requiring theprospective applicant to complete the more thorough Generate NewApplicant Illustration 60.

User Screen 4 depicts Submenu 73, also known as the Generic Supermenu.After modifying whatever data the prospective applicant wishes tochange, Block 74 saves the data. Block 74 also finds loan rates from theDatabase 17, Block 76 gets the average loan rates, and Block 78 getsaverage closing costs.

Retrieve Average Closing Costs 78 uses an average loan closing costbased on the amount of the mortgage by consulting the database ofaverage closing costs, as measured, for example, by the Department ofHousing and Urban Development or some other reliable source ofstatistics on the costs involved in completing a home purchasetransaction.

Proceeding to FIG. 3B-4, the insurance illustration system can bedesigned so that the same computer can be used to provide productillustrations for the insurance products of different carriers. In thisembodiment of the invention, the system offers maximum flexibility sothat it may accommodate virtually any life insurance policy and/orannuity. In a preferred embodiment of the invention, the system alsoprovides many tables for product-specific data such as mortality tables,expense charges, interest rates, and other insurance related data. Thesetables can be used to store the different components of the carriers'products. Product specific "flags" or identifiers in the insurancecomputation formulas can be used to provide maximum flexibility in theway the system makes insurance computations. This allows the system tooffer a method of customizing computations that are common to all lifeinsurance products. This feature also makes it possible for a singlecomputer to efficiently provide multiple life insurance productillustrations for multiple life insurance carriers. (In anotherembodiment of the invention, the system can use front-end networkgateways to connect multiple carriers' computers to the Digital Computer8.)

The system maintains security by affording limited access tocarrier-specific databases. The system provides carriers exclusiveaccess to their own databases, for example, via modem, by requiring apassword. Only individuals authorized by the carrier can access or seethe carrier's databases.

In the case of a generic illustration, Block 80 leads to Block 82, whichsolicits a selection of the best product criteria. Criteria solicited bythe system in Block 82 might include, for example, minimum initial orminimum monthly costs to the borrower. These criteria are subsequentlyused by the system to find the best product. The system also stores theselection in Database 17, via Block 84.

However, if the user selected Generate New Applicant Illustration 60 inFIG. 3 instead of Generate Generic Illustration 58, the user would haveselected a product displayed on the User Screen 2. The system storeseither the product displayed in FIG. 3B-4 or the product found in FIG.3B-4 in Blocks 90 and 84, respectively.

Blocks 92 and 86 identify a count of products to be illustrated andBlock 94 initializes a counter to keep track of the number of productsbeing illustrated. Solicit Premium Payment Plan 96 solicits the mortgagerepayment plan, unless this data has already been selected as part ofthe generic illustration in User Screen 3.

The insurance illustration aspect of the present invention involvescomputing the amount of up-front payments required to obtain aninsurance policy that will, after N years (typically thirty), havesufficient cash value to repay the mortgage. Given the selection of howthe user premium payments will be made, the user must select how themortgage will be repaid in Block 98. Under existing law, the mortgagecan economically be repaid in one of three ways. The policyowner maysurrender the contract and use policy proceeds to repay the mortgage. Inthis case, the system assigns a value of 0 to the mortgage repaymentvariable, LOPT, in Block 98. The policyowner may use a policy loan torepay the mortgage and plan to hold the life insurance contract untildeath. In this case, LOPT is set equal to 1. Alternatively, thepolicyholder may hold the mortgage and life insurance policy untildeath, using annual policy loans to pay the mortgage interest, in whichcase LOPT is set equal to 2. The user may select any combination of thepremium payment and mortgage repayment options at the outset of theillustration process.

There is no formula for the correct premium amount. Instead, in FIG.3B-5, the system uses formulas that project a cash value amountcorresponding to a given premium amount and premium payment plan. Thesystem tests this cash value amount to see if it falls within thesystem's mortgage repayment guidelines as defined in Blocks 102 and 104of FIG. 3B-4. (Separate guidelines exist for each mortgage repaymentplan.)

Turning now to FIG. 3B-5, at Block 106, the system retrieves fromDatabase 17 carrier product information. Block 108 uses this informationto make a first trial annual premium, and the remainder of FIG. 3B-5tunes the trial premium to make it more accurate. If the projected cashvalue falls outside system parameters in Block 112 and if this is thefirst trial in Block 114, the system selects another trial premiumamount above or below (as is discussed more fully hereinafter) the firsttrial premium in Block 116 and produces another cash value estimate inBlock 110.

Because various insurance expenses are variable in ratio to the premiumand policy cash value, the system does not depend on scaling. Instead,the system uses bracketing (i.e., finding a value above, and a valuebelow, a target value). The system finds two premium/cash value pairsthat bracket the desired goals in Block 118, and can use bisection orNewton's method to find the desired premium amount. That is, in thesecond pass through Branch 112, if the target is not met, Branch 114 is"no" (as it is not the first trial). Block 118 tests whether the firstand second trial premiums bracket (fall above and below) the target. Ifnot, Block 116 generates a third trial premium, etc., until the targetis bracketed. If at Branch 122 the system has found two bracketing trialpremium amounts, Block 124 then finds a third trial premium viabisection or Newton's method. To accelerate convergence, if at Branch122 the system has found three trials, from then on, the system usesquadratic interpolation in Block 126 to find the next trial premium. Thesystem replaces the more outlying trial with the new one, and conductsanother iteration. Once the target is met in Branch 112, the monthlypremium amount is stored via Block 120, and the logic goes to FIG. B6.

The two premium payment plans have two system defaults, although othersmay be used at the discretion of the system owner/operator. For asponsored transaction in which a corporation or financial servicesinstitution guarantees the payment of premiums, the default number ofpremium payments is ten. The home buyer pays one as part of the mortgageclosing, and pays the remainder in monthly installments to a lenderescrow account over the next nine years. For a lump-sum prepayment ofthe premium, the default number of premiums is four. One is payable atclosing, and the rest are prepaid by an annuity purchased at theclosing. The system ignores the annuity cost calculation until it hassolved for the correct four premium payment amounts. (Specimens 2-4 showsample illustrations assuming lump-sum prepayment of the premium, andspecimens 5-7 show illustrations assuming sponsored mortgagetransactions.)

More particularly in Blocks 106 and 108, the first way the mortgage canbe repaid is by surrendering the policy. In searching for this amount,the system will iteratively solve for an amount of cash value targetedin FIG. 3B-4, Block 104. This amount will repay the mortgage assumingthe policyowner/borrower surrenders the policy at the end of the lastyear of the mortgage. To arrive at the appropriate cash value amount,the system will iteratively repeat the following six steps until itarrives at a premium amount that will generate an after-tax cashsurrender value equal to the mortgage principal:

1) Select a premium amount, based on a first trial;

2) Use the selected premium amount to compute a cash value in the Nthyear of the mortgage;

3) Compute a life insurance policy basis by adding up cumulativepremiums over the life of the mortgage;

4) Subtract the basis from a total cash value projected in the Nth yearof the policy to arrive at the taxable gain in the policy;

5) Multiply the taxable gain by one minus the customer's tax rate toarrive at the customer's net after-tax gain; and

6) Add the basis back to the net after-tax gain to arrive at theafter-tax cash surrender value.

For example, assume the amount of the mortgage is $262,000 and thehomeowner's expected tax rate in year thirty of the mortgage isthirty-four percent. The system will iteratively solve until it arrivesat a premium amount of $35,664.64 ($8,916.16 annually for four years)and a cash value amount of($378,608.59-$35,664.64)×(1-0.34)!+$35,664.64=$262,007.64. (Specimen 2shows sample output for this mortgage and the LOPT=0 mortgage repaymentmethod. Specimen 5 shows sample output for this mortgage assuming asponsored premium payment plan and LOPT=0).

The second way in which the mortgage may be repaid is using a lifeinsurance policy loan. This illustration assumes that the policyholderelects to take a policy loan against the cash value of the policy in thelast year of the mortgage. Then the policyholder uses the proceeds ofthe policy loan to repay the borrowed mortgage principal. In this waythe homeowner is converting debt with recourse (the lender has recourseto the mortgaged property and the life insurance policy) to non-recoursedebt (the insurance company has recourse only to the life insurancepolicy).

With this second method of mortgage repayment, the system at Blocks 106and 108 uses a different definition of adequate cash value in Block 102.The adequate cash value amount is enough to allow the policyholder tomaintain the policy until death. The system assumes death at ageninety-five or ninety-nine, depending on the requirements of thespecific policy being illustrated. For the policy to remain in forceuntil that age, both the policy cash value and death benefit must alwaysexceed the outstanding policy loan balance. Policy loan balances grow intandem with cash values. Rather than pay each year's policy loaninterest, the policyholder may elect to add this interest to the policyloan principal as additional policy borrowing. By means of a default,the system assumes that the policyholder never repays the policy loanand holds the policy and policy loan until death. (Specimen 3 showssample system output for such a mortgage, a lump-sum prepayment, andLOPT=1. Specimen 6 shows the same transaction assuming a sponsoredtransaction.)

In the example described above, the system illustrates the policyholderreceiving a policy loan equal to $262,000 in the Nth year of the lifeinsurance contract. This amount is enough to repay the mortgage on thehome. The policy loan eliminates the mortgage obligation. The terms ofthe life insurance contract illustrated might call for a policy loanrate of 9.5%. The system would then project the policy loan interestequal to $24,890 at the end of the N+1st year of the life insurancecontract. At the beginning of the N+2nd year, the policy loan interestfor the previous year would be added to the policy loan and the newpolicy loan balance would be $286,890. For the N+2nd year, the systemwould calculate policy loan interest based on the current year's policyloan balance of $286,890. The policy loan interest would therefore be$27,254.55 in the N+2nd year. At the beginning of the N+3rd year, thiswould be added to the policy loan balance. The system would repeat thisprocedure until the final year of the illustration, when the insuredreaches age ninety-five or ninety-nine.

The system projects cash value amounts which may be adjusted by thepolicy loan balance. The system guideline or target cash value for thiscomputation is the cash value balance net of policy loan balances andaccrued policy loan interest. This amount must be slightly greater thanzero in the policy year that the insured would have his or herninety-ninth birthday. The invention allows for two different rates atwhich interest will be credited toward cash value balances. The firstrate is the unloaned funds credited rate, which is the rate credited onpolicy cash values not subject to liens from policy loans. The secondrate is the loaned funds credited rate, which is the rate earned on thatportion of the cash value that the policy has borrowed against.

Returning to the above example, assume that the system lowered itsinitial premium plus annuity payment to $26,151. The system now projectsthe cash value to be $302,973.30 in the thirtieth year of the mortgage.After the homeowner uses the $262,000 policy loan to pay off themortgage obligation, the cash value will remain at $302,973.30. However,by year 30 the remainder will be equal to $40,973.30 net of policyloans. This amount, $40,973.30 net of policy loans, will earn interestat an unloaned funds credited rate. The $262,000 in cash value nominallycollateralizing the policy loan will earn interest at a loaned fundscredited rate.

In most universal life insurance policies the loaned funds credited rateis much lower than the policy loan interest rate. This creates anegative arbitrage or "spread" between the interest earned and interestpaid within the two accounts of the policy. Because of this negativespread, policy loan balances typically grow much more quickly than thepolicy cash value. After a few years, policy debt will exceed cashvalue. At this time, the policyholder must either pay additionalpremiums, reduce the policy loan balance, or allow the life insurancepolicy to lapse. Using the above example, assume the individualrequesting the illustration is a male aged thirty-two at the time of theillustration. Assume further that the loaned funds credited rate is afull three percentage points less than the 9.5% policy loan rate. Hereagain the system will compute the policy cash value as $302,973.30 inyear 30. However, by year 36 of the policy, the policy loan balance plusoutstanding policy loan interest would be $451,633.35, while the policycash value would be $440,503.71. This would force the policyholder topay additional premium payments or allow the policy to lapse (and paythe tax consequences) in the following year.

On the other hand, assuming a zero spread policy loan, by the end policyof year 36, the policy cash value would be $511,955.57. The policy loanbalance plus outstanding policy loan interest would again be$451,633.35, yielding a net cash value of $60,322.21. Assuming constantinterest rates and mortality charges, the policy would remain in placeuntil the insured's assumed death at age ninety-nine when the net cashvalue would be $354.43. So long as interest rates remain relativelyconstant, no further premium payments are required of the insured.

Low or zero spread policy loans have been available to policyholders inthe past. However, their use has been limited previously to key-man orcorporate owned life insurance policies. They have not heretofore beenused in conjunction with home mortgages in accordance with the teachingsof the present invention, wherein a system illustrates, monitors, andadministers these policy cash values and policy loan balancesefficiently and at low cost. This capability permits carriers to offerprospective applicants a low or zero spread policy loan for use in therepayment of mortgages. Such a spread is preferably less than 300 basispoints. The use of these smaller spreads minimizes the ratio of cashvalue to policy loan value required to keep the policy in force over thelife of the policy. This, in turn, reduces the amount of up-frontpremium payments required in the funding of the transaction.

The third illustration option (LOPT=2) is computed using the target cashvalue for the zero-spread/low spread policy loan option described above(LOPT=1) and computed in Block 102. This is because it assumes aroll-over of the mortgage obligation. In this scenario, at the end ofthe term of the mortgage, the homeowner requests a new mortgage. Thelender will approve such a transaction subject to a second credit reviewand collateral evaluation in the last year of the mortgage. The systemtherefore calculates an amount of premium plus annuity ($26,151) whichwill provide for repayment of the mortgage in the Nth year (assumingLOPT=1), then shows alternative uses of the policy as of that year.

This third method assumes the homeowner does not pay off the principalin year N. Instead, he or she rolls over the mortgage and uses policyloans thereafter to pay the mortgage interest. The mortgage is helduntil the death of the homeowner. Mortgage interest is paid using zeroor low spread policy loans from the life insurance policy. This methodof mortgage repayment is attractive to those wishing to maximize theamount of life insurance death benefit payable to their estate. For theabove example, assuming death at age ninety-nine, the death benefit netof policy loans would be $1,868,160.32. The policy loan balances in thisrepayment option remain extremely low compared to the policy cash valueand death benefit ($5.8 million vs. death benefits of $8.2 million).Therefore, an amount of premium plus annuity to generate enough cashvalue to pay off the mortgage at the end of the mortgage term assumingLOPT=1 ($26,151) will be more than sufficient to carry the policy untilthe insured's ninety-ninth birthday. (Specimen 4 shows sample systemoutput assuming the above-characterized mortgage, a lump-sum prepaymentpremium plan, and LOPT=2. Specimen 7 shows the same transaction but witha sponsored premium plan.)

Moving now to FIG. 3B-6, the system begins a process of checking theillustration just calculated to make sure it is in conformity with thelegal definition of insurance by calculating regulatory guidelinepremium amounts in Block 128. These amounts are regulatory limits on thesize of the premium relative to life insurance cash value and deathbenefits. As is subsequently discussed, the regulatory benchmarksinclude guidelines for Single Premium, Level Premium, and "Seven Pay"premium amounts. In Branch 130, the system compares these guidelinepremium amounts to those premium amounts previously stored via Block120, the premium amounts for the proposed illustration. The cumulativepremium initially illustrated must not exceed the cumulative GuidelineLevel Premium or the Guideline Single Premium in any given year of theproposed illustration. If the premium amounts exceed any of theguidelines, the system recomputes the needed premium using the newlycomputed guidelines via Block 132 and goes via logic entry point Z2 toFIG. 3B-5.

Once the system has solved for the correct premium/cash valuecombination and has tested this value against regulatory requirements,the system carries out four other operations. First, it prepares afurther illustration in Block 133. This illustration assumes that thepolicyholder pays the previously determined premium amount and maintainsthe desired death benefit. However, the illustration further assumesthat the carrier pays only the minimum guaranteed interest creditingrate on policy cash value, and charges the maximum mortality chargespossible under the terms of the insurance contract. Samples of theseGuaranteed Values appear in Specimens 2-7.

Next, the system in Block 134 computes two policy cost indices designedto provide the prospective applicant with a bench mark for measuringproduct performance. The first index is the Surrender Cost Index whichis 1000 times the present value of premiums paid discounted at fivepercent minus the present value of the end-of-period cash value dividedby the present value of the death benefits. The second index, known asthe Net Payment Cost Index, is equal to 1000 times the ratio of thepresent value of the premiums discounted at five percent to the presentvalue of the death benefits over the period discounted at five percent.The system calculates these two indices through Years 10 and 20 of thepolicy illustrated, assuming current interest and mortality chargesapply, and assuming guaranteed interest and mortality charges apply.Sample calculations of these cost indices appear on the last page ofSpecimens 2-7.

Next the system computes the financial advantage to the prospectiveapplicant of the Ryan Mortgage in Block 135. The computation comparesthese costs for the Ryan Mortgage and a conventional mortgage after fiveand ten years. The analysis also includes a comparison of thehomeowner's equity in the home, assuming the home buyer enters into aconventional mortgage transaction, and the accumulated cash value in thelife insurance contract in the Ryan Mortgage. This analysis appears inSpecimens 2-7.

Next, the system provides an analysis of the effect of a change ininterest rates on the required premium payment and cash value in Block136. The system conducts this analysis first, by assuming the interestrate index pushes the carrier's credited rate down to the guaranteedrate and second, assuming the index pushes the mortgage rate up to thelender's cap after the first year. (The system does not perform thesecond analysis in the event a fixed rate or variable mortgage with nocap has been chosen.)

The first analysis assumes a decline in interest rates. Using thepremium amount previously solved for, the system reprojects the cashvalue assuming mortality charges remain constant, but interest rates godown to the carrier's guaranteed rate. The analysis, provided for years2 through the end of the mortgage, also assumes that in each year thecustomer is required to make additional premium payments. Theseadditional premium payments are equal to one-twelfth of the differencebetween the cash value as it was originally projected and the cash valueassuming a minimum guaranteed interest rate (plus premium processingcharges). The payments are made monthly to the lender where they areheld in escrow until the end of the year whereupon they are sent to thecarrier. Because in a preferred embodiment of the invention the carriercredited and mortgage interest rates are tied to the same index, thedecrease in the mortgage cost in most years will be less than theincrease in the cost of a supplemental premium.

The additional premiums paid by the borrower will also permit the homebuyer to pay off the mortgage sooner, assuming the home buyer has chosento repay the mortgage by surrendering the life insurance contract. Thisis because the additional premium increases the policyholder's basis,thereby reducing the amount of the cash value which must be used to paytaxes upon surrender.

The second analysis made by the system in Block 136 assumes that theinterest index rate rises, pushing the mortgage interest rate up to thecap. In a preferred embodiment of the invention the mortgage interestrate is variable. The carrier's crediting rate also rises with theindex. This, in turn, causes cash value to accumulate faster thanoriginally projected. This will permit the home buyer to pay off themortgage sooner. The interest rate sensitivities summarized in Block 136appear in Specimens 2-7.

These analyses, furthermore, permit the system to automatically generateTruth in Lending disclosures. By calculating the maximum cost to theconsumer, assuming both maximum and minimum interest rates, the systemapprises the consumer of the maximum mortgage cost in any year.

After the aforementioned supplemental analyses have been completed, thesystem saves the results in Block 137 for later printing. This completesthe illustration for a particular financial product. Next, the systemchecks to see if it needs to make a similar computation for otherproducts. If in Branch 138 it finds that not all desired products havebeen illustrated by comparing a target number of products to beillustrated (from Block 92 or 86) with a counter, the system incrementsthe counter in Block 139 and returns to FIG. 3B-5 to initiate anotherillustration.

Otherwise, the system tests whether more than one product has beenillustrated (J>1), and if so, proceeds to Block 142 to find the bestproduct based on the criteria entered in Block 82. In either case, thelogic goes to Block 144 to store the insurance product specific data foran illustration, and then goes to FIG 3B-7.

FIG. 3B-7 produces a comparative illustration of a conventionalmortgage. Block 146 computes the down payment amount. Block 148 thencomputes the loan amounts and calculates monthly payments. Block 150computes a conventional mortgage, term insurance cost, and privatemortgage insurance cost such that Block 152 can produce an illustrationof the Ryan Mortgage in comparison with a conventional mortgage. Theillustration is displayed on Terminal 4 via Block 153. If, in Branch154, the prospective client specifies a changed down payment amount, thesystem performs a recomputation via FIG. 3B-5. Otherwise, the systemgoes to FIG. 3B-8.

Turning to FIG. B8 at Block 156, the values relevant to the computationof an illustration are stored in the Database 17. The user can select anumber of options: Print Illustration? 158, which will print theinformation on the Local Printer 5 via Block 160; Print and MailIllustration? 162, which will print the illustration on the CentralPrinter 9 for mailing to a requested address via Block 164; and MakeApplication Using This Illustration? 166, which merges illustration datawith stored text to make an application form, in Block 168. Block 168also will save the illustration results for further analysis or review,except if this is a generic illustration (as it has been in the presentdiscussion), in which case the generic illustration is removed from theDatabase 17. However, were this a new applicant illustration, the usercould also access the saved illustration (for example, by the UpdateExisting Illustration 62). The logic returns to the submenu provided byBlock 56 in FIG. 3. This return is helpful for changing the genericillustration assumptions in order to see a different version of thegeneric illustration.

In FIG. 3, again, the Generate New Applicant Illustration 60 function isillustrated in FIGS. 3B-1 and User Screens 5-20. This part of the logicperforms a similar function to that described above with reference tothe Generate Generic Illustration 58 function, with the exception thatillustrations can be customized to the prospective applicant's ownparticular circumstances to produce an illustration that resembles afinancial transaction that might be entered into.

In FIG. 3B-1, Solicit 170 generates User Screens 5-7 to obtaininformation about the prospective applicant, the prospective applicant'semployer, and the property at issue, respectively.

User Screens 5-7 request informational items for use in providing amortgage quote. These items include, but are not limited to, theprospective applicant's name and address, the name and address of theprospective applicant's employer, the location of the property to bemortgaged, and the name and address of the realtor or sales agentrepresenting the individual borrower in the purchase of the property.

Information regarding the employer (User Screen 6) of the prospectiveapplicant is useful for the purpose of providing a printed loanapplication form. Also, because such data may be referenced against thelist in the Database 17 of companies that have agreed to guarantee thepremium payments to be made by employees, this information may also beuseful in facilitating the loan approval and endorsement process. Suchguarantees increase the security of the mortgage from the lender'sperspective, thereby increasing the likelihood of mortgage approval onthe part of a lender or other loan endorsing entity. Therefore,maintaining information on such guarantees and providing a function toverify the availability of such guarantees and the authenticity thereofis an important feature of the invention.

Information regarding the employer of the prospective applicant is alsouseful in the life insurance underwriting process. For example, thereexist policies that life insurance carriers sell in large volumesthrough sponsored corporate purchases. These demand far less stringentunderwriting requirements than would otherwise be required had theprospective applicant attempted to purchase the life insuranceindividually. The reason life insurance carriers may offer such policieshas to do with the risks inherent in insuring large groups. If aninsurance company were to offer to the general public life insurancepolicies that asked no questions as to the prospective insured's health,the insurance carrier would attract primarily those individuals who wereof ill health or who expected to have increased mortality risk. This isknown to those familiar with the life insurance industry as "adverseselection." Adverse selection can be avoided in the case of a sponsoredcorporate purchase by designating a class of insureds all of whom willbe insured. A class of insureds thereby takes on the characteristics ofa randomly selected portion of the population at large, which, if largeenough, will exhibit the same statistical distribution of deaths as thepopulation at large. A class can be defined in many ways and mightinclude such groups as all individuals who are members of the managementof a large corporation or those who are relocated to a new community asa result of the normal performance of their duties.

In the event that corporations are willing to offer corporate sponsoredpurchase of life insurance, life insurance carriers may be willing torelax their underwriting requirements. Relaxed underwriting requirementsusually take one of two forms, simplified issue or guaranteed issue. Insimplified issue underwriting, only a few simple questions (typicallythree or four) are asked of the insured. In guaranteed issueunderwriting, no questions apart from the age and sex of the prospectiveinsured are asked.

The availability of this kind of underwriting may be beneficial to boththe insurance carrier, which may profit from increased insurance salesby providing insurance policies with reduced underwriting in a highvolume sale, and to the employer, which as a consequence may offer anenhanced product to its employees. In addition, this kind ofunderwriting creates another use for the prospective applicant'semployment information. The employment information may be compared to adatabase of all those companies which offer corporate sponsorship ofinsurance purchases for their employees. If there is a match between thedata provided concerning a prospective applicant's employer andinformation in the database, a corporate sponsor number will be used toidentify a product which may be offered to the employee at reduced costor with less stringent underwriting requirements.

A preferred embodiment of the invention involves a system of corporatesponsorship recognition involving the identification of companiesproviding both the aforementioned guarantee of premium payments and thecreation of a defined group for the provision of specializedunderwriting. Block 172 is dedicated to this task.

An inquiry into the prospective applicant's tax status begins with Block174. The prospective applicant's tax rate information is input directly,as indicated in User Screen 8.

The information obtained via User Screen 8 is used in estimating theamount of the tax benefit to the borrower from the deductible mortgageinterest expense, which is an important consideration to anyoneevaluating the monthly net after-tax cost of a home purchase. This taxrate is then stored in the Database 17 for later use in the computationof tax credits from the deductible mortgage interest expense.

Proceeding to FIG. 3B-2, the logic develops information as to what kindof loan the prospective applicant might require.

User Screen 9 generated by Block 176 inquires as to the amount of moneywhich will be required to purchase the target property, based on theentered estimated appraised value of the real estate. This data iswritten to the Database 17 for later retrieval and processing by theDigital Computer 8 in the creation of the illustration. User Screen 9further asks the user to choose between: (1) selecting a loan offered byone of the lenders that currently offers mortgages using life insuranceas collateral and which has authorized the system owner/operator toillustrate the use of its loans in conjunction with life insurance; or(2) entering hypothetical loan rates. (See Branch 178 in FIG. 3B-2.)

The ability to illustrate hypothetical loan rates is offered as aconvenience to prospective borrowers who, through their own lendingrelationships, may have identified lenders who are willing to provideloans which may not be available to other borrowers.

In the event the user chooses to use one of the loans from a lenderwhich has authorized the illustration of its loans, the logic consultsthe Database 17 at Block 180 to identify all those loans listed andwrites selection of loan, its pricing, and the name of the institutionoffering it in User Screen 10.

Otherwise, from Branch 178, in the event the user chooses to enter ahypothetical rate, the logic requests basic information regarding theexpected loan costs via User Screen 11, which is generated by Block 182.

To minimize the potential for generating an unreasonable illustration asa result of a mistake, Branch 184 checks to see that such rates arereasonable, given the current range of possibilities available in themarket. If the rates are unreasonable, the logic loops back to Block182.

User Screens 10 and 11, constructed at Branch 186, also ask the user ifthe prospective applicant would like the illustration to be based onclosing costs which are known, or if it would be preferable to use someor all of the closing costs provided by the Database 17, derived fromstatistics provided by the Department of Housing and Urban Developmentor some other entity which gathers and reports such information. In theevent the prospective applicant knows or can reliably estimate some orall of the costs, User Screen 12 appears, via Block 188.

The typical closing costs estimated by the system appear in one column.The user may alternatively enter the prospective applicant's estimate ofthose costs in a second column or leave certain cost categories in thesecond column blank, or if only a grand total of all closing costs isknown to the prospective applicant, the prospective applicant may chooseto enter the grand total amount, which then supersedes the itemizedamounts listed in the "if known" column. The user must, however, enter aseparate amount for the tax escrow. In those categories where blanksremain, Block 190 provides estimates. After Block 190, the estimateswill be written to the Database 17 via Block 192, and in thosecategories where data has been entered to fill in the blanks, theDigital Computer 8 will, for this specific illustration, replace thesystem's estimates with those made by the prospective applicant whenwriting these values to the Database 17. Likewise, if only a grand totaland tax escrow amount have been entered, those amounts are written tothe Database 17 superseding all of the system's estimates.

Turning now to FIG. 3B-3, Branch 194 tests whether the system hasidentified a corporate sponsor number when the prospective applicant'semployment data was compared to the aforementioned stored corporatesponsor tables via Block 172. If none has been identified and theprospective applicant is unsure if there is a sponsor, Block 196presents User Screen 13.

User Screen 13 asks if the prospective applicant has a corporate sponsornumber and provides access to a listing of sponsors. In the event thatthere is a sponsor number in Branch 194 or in Branch 198, User Screen 14appears via Block 200.

In User Screen 14, options are presented as to the lump-sum prepaymentor the corporate guarantee of annual premium payments to be made, aswell as the preferred mortgage repayment plan. User Screen 14 alsoprompts the user to select the mortgage repayment plan. Once designated,these selections are written to the Database 17 for the finalcomputation of the mortgage using life insurance as collateral. If acorporate sponsor number is not identified in Branches 194 or 198, UserScreen 15 appears via Branch 202.

In User Screen 15, via Block 202, options are presented as to thelump-sum prepayment or annual premium payments to be made, as well asthe mortgage repayment plan. Screen 15 also prompts the user to select amortgage repayment plan based on the distinct financial advantages ofeach plan to the prospective applicant. These selections are written tothe Database 17 for the final computation of the mortgage using lifeinsurance as collateral.

At Branch 204, if the prospective applicant is interested in securing anirrevocable letter of credit arrangement to backup the annual premiumpayment, a list of institutions which might be willing to offer such isprovided to the user via Block 206. The entry of a selection of aninstitution in Block 206 brings up a financial sponsor number, which iswritten to the Database 17 for later retrieval and processing by theDigital Computer 8 in the creation of the illustration. In the event ofunsponsored (lump-sum) purchases and Letter of Credit sponsoredpurchases, the information is stored at Block 208. The system reviewspolicy parameters saved in the Database 17 and consults the insurancedata tables for policies conforming to the choices selected, and writes(Letter of Credit or unsponsored) summary information regarding thesepolicies to the screen. The screen data appearing before the user issummarized in User Screen 16 for borrowers contemplating employersponsored life insurance purchases.

Once selected by the user the policy selections are written to theDatabase 17 for later retrieval and processing by the Digital Computer 8in the creation of the illustration. If instead a corporate sponsornumber existed in Block 194 or 198, Block 210 presents User Screen 16,which obtains mortgage data from user selections.

Block 210, User Screen 16, selects a specific insurance policy inaccordance with corporate sponsorship. The selected policy offeredthrough the corporate sponsor can include three underwriting types: fullmedical underwriting, simplified issue and guaranteed issue. Normally,with guaranteed issue or simplified issue underwriting, the selection islimited to only one carrier's policy. Most carriers will require thatonly their product be illustrated in exchange for offering non-medicalunderwriting. The system then moves to Block 212 where the underwritingtype is determined. If the policy is guaranteed issue, then the logicproceeds directly to Block 214 to store the selection, and then to FIG.3B-4, where the system identifies the illustration as a single productillustration.

If instead the user had selected Simplified, the logic proceeds, toBlock 216 where a four-question health questionnaire is presented viaUser Screen 18.

If the prospective applicant answers all the questions in the negative,at Branch 218, the policy selection and underwriting information iswritten to the Database 17 via Block 214 for later retrieval andprocessing by Digital Computer 8 in the creation of the illustration.

However, if the prospective applicant does not answer all questions inthe negative, the logic of Branch 218 offers the choice of proceeding toElectronic Health Questionnaire 220, exemplified in User Screen 19. Thechoice is whether to continue to illustrate or to proceed to anElectronic Health Questionnaire 220, which is designed to moreaccurately portray the health status of the prospective applicant andhence facilitate the underwriting process by providing healthinformation which will be needed for the prospective insured's lifeinsurance application. This questionnaire will vary by policy, and mayrequire several screens to complete, as different carriers have verydifferent underwriting standards.

The other choice offered in Branch 218 is to proceed directly to theillustrations (via FIG. 3B-4) with the knowledge that illustrationvalues may not reflect the actual insurance costs to be incurred by theindividual. In this case, a blank health questionnaire is also printedout for the prospective applicant to complete at a later date.

Also, if the policy selected uses Medical underwriting, (or after Block208) the logic proceeds to Block 220, User Screen 20, where the userenters answers to the Electronic Health Questionnaire 220 beforeproceeding ultimately to FIG. 3B-4.

No matter what choice is selected, all data created regarding theprospective insured's health status is written at Block 214 to theDatabase 17 for later retrieval and processing by the Digital Computer 8in the creation of the illustration.

The logic then proceeds to FIGS. 3B-4, etc., which has been previouslydiscussed herein with reference to the Generic Illustration selection ofBlock 58. Generally, though, the logic determines the number of policiesto be illustrated (one for corporate sponsored or user selectedpolicies, two or more for best product) solicits the best product searchcriteria, reads the values saved in the database, computes insurance andloan values, writes these values to the illustration table, prints thesevalues on the user's screen, and allows the user to print out theillustration requested. However, in contrast to the procedure followedin the generation of a generic illustration, the logic automaticallyasks the user if it would be desirable to save the values in theillustration table for later use in updating the illustration or ingenerating and printing completed loan and/or insurance applicationforms as in Block 62.

Returning to FIG. 3, the Update Existing Illustration 62 function goesto FIG. 3C-1, which commences with Select Input Menu 222. This selectionis depicted in User Screen 21, which is also known as the UpdateExisting Illustration Supermenu.

The logic then goes to the following boxes: Block 224 to update theprospective applicant data, including personal, employment, and healthdata; Block 226 to update the property data; Block 228 to update the taxrate data; Block 230 to update the insurance data, including the premiumstructure, as well as the policy selection; and Block 232 to update themortgage data, including the loan selection and closing costs data.These Blocks 224-232 permit the user to revise selected data in Database17. Once the menu item has been selected and the update screen has beenvisited, Block 234 is used to facilitate going to the appropriatescreen. The screens are filled in with the old data and in Block 236 theuser is allowed to change, add to, or delete from any of the existingdata. Block 236 then returns to Block 222. When the user has gonethrough this loop as many times as necessary to update whatever screensneed updating, then from Block 222, the choice of Proceed, Block 238,can be made in which the illustration process proceeds to FIG. 3B-5,which then completes the illustration.

Additionally, the user may select Help, Block 18, which has beenpreviously mentioned as being available from any screen in the systemfrom the Update Existing Illustration Supermenu. A representativecontext-sensitive hypertext Help screen is shown in User Screen 22.

Lastly, Block 240, may be selected to quickly terminate the currentillustration session and return to the Main Menu 44 via Entry Point X1.The user is given an opportunity at this time to save what data has beenentered thus far.

With further reference to FIG. 3, the Print Life Insurance Application64 selection goes to FIG. 3D-1. Block 242 selects one form from avariety of insurance forms that could be printed, depending on thecarrier. The logic proceeds to Block 244, which retrieves the existingprospective applicant data from Database 17, which was solicited in theprocess of creating the illustration, and prefills the insuranceapplication form. If necessary, Block 246 allows the user to fill in anyadditional data. Then Block 248 prints the application at Local Printer5. The logic proceeds to Block 250 which requests whether or not to sendthe application to the system owner/operator electronically. (The systemowner/operator may also expedite transmission of application to theinsurance carrier.) If that answer, in fact, is "no," the logic goes toBlock 252 to return. If the answer is "yes," Block 254 checks forcompleteness and permits sending the application to the Carrier viaBlock 256. Block 258 saves the insurance policy data and then returns toBlock 64 in FIG. 3.

FIG. 3 also has a Print Loan Application 66 selection, which goes toFIG. 3E-1. While differing from Print Life Insurance Application 64 inthe output provided, these two parts of the program carry out similartasks. The user is asked whether to fill out the form by: (1) merging itwith existing applicant illustration file data and adding whatever datamight remain missing; or (2) filling out a loan form electronically exnove. The user has the option of printing out the application form invarying degrees of completeness. However, in order for the loanapplication to be accepted electronically for processing, the form musthave been completed for all answers programmed.

More particularly, in FIG. 3E-1, Block 260, the system automaticallyselects the particular loan application form from the library of loanapplication forms for the various lenders, and proceeds to Block 262,which retrieves existing applicant data from Database 17 and prefillsthe form. Block 264 allows the user to update fields that were notpresent in the illustration process. Block 266 prints the application onLocal Printer 5. Block 268 asks whether or not the application should besent electronically to the lender. If the answer is "no," the routinegoes to Block 270, which returns to Block 66 in FIG. 3. If the answer is"yes," the routine proceeds to Block 272 to cheek the application forcompleteness. If it is complete, it is sent via Block 274 to the lenderfor processing electronically. Block 276 saves the data, and the logicfinally returns to Block 66 on FIG. 3.

Review Insurance Product Developments and Review Loan Rates, Functions68 and 70 in FIG. 3, permit the user to read through prepared textualdata by allowing the user to move from screen-to-screen. Once the userhas completed a review of the data from Database 17, one or all of thetextual screens or "pages" can be printed at the Local Printer 5.

More particularly, for Review Insurance Product Developments 68 in FIG.3, the logic goes to FIG. 3F-1. In Block 278, new insurance productdevelopments are retrieved and displayed for the user. Block 280 allowsthe new insurance product developments to be printed on the LocalPrinter 5, if desired, and then the logic returns via Block 282 to Block68 on FIG. 3.

In FIG. 3, Review Loan Rates 70 goes to FIG. 3G-1, which begins withBlock 284, to retrieve and display the loan rate data from Database 17.Block 284 permits displaying that information and Block 286 permitsprinting that information on Local Printer 5, if desired, and then thelogic returns via Block 288 to Review Loan Rates Block 70 of FIG. 3.

A separate but associated computer program which uses Database 17 isexemplified in FIGS. 3H-1 and H2. FIG. H1 shows a reillustrationfunction of the present invention. The system uses this function in themaintenance of the policies, after the prospective applicant has entereda home financing transaction. The system essentially reillustrates apreviously given illustration and saves the results of thereillustration. The system uses this reillustration information tomonitor the annual cash value accumulation of the life insurancecontract.

The system performs this function using, in part, data it already hasfrom Database 17 by completing a batch run, for example, two monthsprior to the policy anniversary date. This is shown in Block 290. Thesystem finds the original applicant data at Block 292 in the existingapplicant Database 17, and then compares the cash value originallyprojected in the original Ryan product illustration to the annual cashvalue growth actually occurring in the insurance contract. In order todo this, the system finds the original illustration product parametersvia Block 294 from the Database 17. Monitoring computations may be madeusing a life insurance policy index rate and a mortgage index rate.

In a preferred embodiment of the system, the life insurance policycredited rate and the mortgage loan rate use the same interest rateindex. The interest rate index might be, for example, the average yieldon United States Treasury Bills over the past year. Both life insurancepolicy interest credited and the mortgage rate are therefore variable inone embodiment of the invention. (In another embodiment of theinvention, the mortgage interest rate and payment can be fixed.)However, some lenders will introduce mortgage products that place capsor limits on the amount interest rates can go up or down. This couldlimit interest changes in a given year, and/or over the life of themortgage. This is appealing to borrowers because it limits the potentialcost of the mortgage upon a rise in interest rates. Also, most lifeinsurance contracts must by present law provide a guaranteed minimumcredited rate of interest on policyholder's funds. This amount isusually four percent. This feature is appealing to policyholders becauseit assures them a minimum return on their invested finds.)

In Block 296, the reillustration function of the system computes at theend of each year what the interest rate will be in the upcoming yearusing historical index interest rate information from Database 17. Itmakes this calculation for both the life insurance policy and themortgage. This, in turn, permits the system to predict the cash valueaccumulation in the policy and recalculate the monthly mortgage paymentin Block 298.

If interest rates go down, the amount of interest credited on thehomeowner's policy will go down and the cash value will drop below thetarget. In order for the product to be acceptable to lenders orendorsers, however, the system must assure that the homeowner will havesufficient cash value to pay back the principal at the end of themortgage term. Therefore, the terms of the mortgage agreement mayrequire that the homeowner pay extra premiums in the event of a cashvalue shortfall. There is a test of whether extra premiums calculated bythe system are payable upon a projected cash value shortfall due tolower interest rates in a given year in Block 300. The amount the homebuyer must pay is determined by reference to the difference between thecash value originally projected and the amount that the contract willearn in the upcoming year. (A rise in interest rates will create a cashvalue surplus that will carry over into years of low interest rates.)This amount, for example, can be payable in twelve monthly installmentsand held in escrow by the lender. These amounts are computed in Block302, the mortgage payment is computed in Block 304, FIG. H2, these arestored in memory in Block 306 and sent to the lender in Block 308. Thelogic returns via Block 310 to Block 290.

At the end of the year, the lender sends the accumulated twelve monthlyextra premium payments to the insurance company. After this payment ismade, the life insurance policy will be at its originally projected cashvalue. Thus, the policy is subsequently back on target, even thoughinterest rates may have fallen below original projections.

The increased cost of the additional premium payment payable in theevent of a cash value shortfall is offset by the decreased cost of themortgage interest. Mortgage interest rates typically exceed lifeinsurance credited rates by one or two percentage points. The cash valueamount will exceed the mortgage principal only in the last years of themortgage. Therefore, the decrease in the cost of the mortgage paymentwill equal or exceed the cost increase from supplemental insurancepremium payments. The net payment will be lower in all but the lastyears of the mortgage. The supplemental insurance premium payments canonly exceed the decrease in mortgage payments when the cash valuebalance exceeds the principal balance. Then, generally after yeartwenty-five of the mortgage, a sudden drop in interest rates will causethe homeowner to pay the largest extra premium payments. This is becausethe cash value accumulation is greatest in those years.

This situation is analogous to the effects of a precipitous drop ininterest rates in the last years of a variable rate conventionalmortgage. In a variable rate mortgage, the year's mortgage payment isrecalculated each year. The calculation is based on the preceding year'sprincipal balance, the year's interest rate, and the number of paymentsremaining over the life of the mortgage. The rate at which principal isamortized in a conventional mortgage differs, according to the interestrate. At higher interest rates, amortization occurs more slowly. Thus,if the mortgage principal has been amortized at a higher interest rateand interest rates drop suddenly in a given year, the homeowner must paya larger amount of principal in that year than originally expected. TheRyan Mortgage functions the same way when interest rates decline.However, when interest rates go up, in the Ryan Mortgage principalaccumulation is actually more rapid, because the principal isaccumulating in a life insurance contract. Thus, the Ryan Mortgagevariable rate mortgage offers the consumer the same assurance ofmortgage repayment as a conventional mortgage upon falling interestrates, but it also provides for more rapid repayment of the mortgage inthe event of rising interest rates. This feature is a significantimprovement over the conventional variable rate mortgage.

FIG. 4 provides a depiction of a relational Database 17 for the presentinvention. The description of the relational Database 17 includesnumbered entity (database table) definitions and detailed descriptionsof the columns (fields) present and their characteristics. NOT NULLspecifies that a column is required to be filled, and TYPE designatesthe type of data that this column contains. The following tabledefinitions parallel the above entity definitions and detail the columns(fields) present and their characteristics.

ADDITIONAL₋₋ RESPONSES 400 has records of additional responses made bythe prospective applicant to questions that appear on an insurance orloan application form that were not solicited during the illustrationprocess.

    ______________________________________                                        Name               Null?      Type                                            ______________________________________                                        ADDITIONAL.sub.-- RESPONSES.sub.-- ID                                                            NOT NULL   NUMBER                                          APPLICATION.sub.-- ID         NUMBER                                          PAPER.sub.-- FORM.sub.-- ITEM.sub.-- ID                                                                     NUMBER                                          RESPONSE                      CHAR(255)                                       ______________________________________                                    

APPLICATION 402 is a super entity which holds the various insuranceapplications 402A and loan applications 402B (each specific type ofapplication is a view or instance of this table). These applicationrecords are built on information contained in the illustration, as wellas supplemental information supplied by the prospective applicant (e.g.,provided in ADDITIONAL₋₋ RESPONSES 400). There is one APPLICATION 402record for every application created for a prospective applicant.

    ______________________________________                                        Name             Null?       Type                                             ______________________________________                                        APPLICATION.sub.-- ID                                                                          NOT NULL    NUMBER                                           APPLICATION.sub.-- TYPE      CHAR(10)                                         THEPI.sub.-- APPLICATION     NUMBER                                           ILLUSTRATION.sub.-- ID       NUMBER                                           PAPER.sub.-- FORM.sub.-- ID  NUMBER                                           ______________________________________                                    

CLOSING₋₋ COSTS 404 is an entity that holds closing costs data that isused to generate the estimates used for the closing costs specific to anillustration.

    ______________________________________                                        Name              Null?      Type                                             ______________________________________                                        CLOSING.sub.-- COSTS.sub.-- ID                                                                  NOT NULL   NUMBER                                           CITY                         CHAR(30)                                         STATE                        CHAR(2)                                          ZIP                          NUMBER(5)                                        TAX.sub.-- ESCROW            NUMBER                                           INTEREST.sub.-- ADJUSTMENT   NUMBER                                           LEGAL                        NUMBER                                           TITLE                        NUMBER                                           GOVMT                        NUMBER                                           SURVEY                       NUMBER                                           HAZARD                       NUMBER                                           OTHER                        NUMBER                                           ______________________________________                                    

The CONVENTIONAL₋₋ MORTGAGE 406 entity contains all the informationnecessary to compute the conventional mortgage costs for the sameproperty. These figures are reported in the illustration printout.

    ______________________________________                                        Name                Null?      Type                                           ______________________________________                                        CONVENTIONAL.sub.-- MORTGAGE                                                                      NOT NULL   NUMBER                                         LOAN.sub.-- TERM               NUMBER                                         INTEREST.sub.-- RATE           NUMBER                                         POINTS                         NUMBER                                         ______________________________________                                    

The CS₋₋ CLOSED₋₋ ELIGIBILITY 408 entity contains the specificeligibility requirements for each corporate sponsored premium guaranteeplan. Specifically, it contains the eligibility requirements for closedplans, i.e., those corporate sponsored premium guarantee plans that areavailable only to limited personnel within an organization.

    ______________________________________                                        Name                Null?      Type                                           ______________________________________                                        CS.sub.-- CLOSED.sub.-- ELIGIBILITY.sub.-- ID                                                     NOT NULL   NUMBER                                         CS.sub.-- ID                   NUMBER                                         ______________________________________                                    

The CS₋₋ OPEN₋₋ ELIGIBILITY 410 entity contains the specific eligibilityrequirements for each corporate sponsored premium guarantee plan.Specifically, it contains the eligibility requirements for open plans,i.e., those corporate sponsored premium guarantee plans that areavailable to all personnel within an organization.

    ______________________________________                                        Name               Null?      Type                                            ______________________________________                                        CS.sub.-- OPEN.sub.-- ELIGIBILITY.sub.-- ID                                                      NOT NULL   NUMBER                                          CS.sub.-- ID                  NUMBER                                          ______________________________________                                    

The EMPLOYMENT 412 entity contains the employment data for theprospective applicant requesting an illustration, such as place ofemployment, salary, etc.

    ______________________________________                                        Name             Null?      Type                                              ______________________________________                                        EMPLOYMENT.sub.-- ID                                                                           NOT NULL   NUMBER                                            EMPLOYER.sub.-- ID          NUMBER                                            PERSON.sub.-- ID            NUMBER                                            OCCUPATION                  CHAR(30)                                          TITLE                       CHAR(30)                                          PHONE                       NUMBER(10)                                        PHONE.sub.-- EXTENSION      NUMBER                                            SALARY                      NUMBER                                            ______________________________________                                    

The FMA₋₋ HELP 414 entity contains all context sensitive, hypertextlinked help records for Help 18. It contains context keywords, andhyperlink keywords in addition to the help text that enables thesefeatures.

    ______________________________________                                        Name          Null?        Type                                               ______________________________________                                        FACILITY      NOT NULL     NUMBER(4)                                          TOPIC         NOT NULL     CHAR(30)                                           LINE          NOT NULL     NUMBER(5)                                          TEXT                       CHAR(80)                                           ______________________________________                                    

The HEALTH₋₋ QUESTION 416 entity contains the individual questions thatcomprise a specific health questionnaire. Depending on the question andquestionnaire, a specific question may appear in multiple healthquestionnaires.

    ______________________________________                                        Name               Null?      Type                                            ______________________________________                                        HEALTH.sub.-- QUESTION.sub.-- ID                                                                 NOT NULL   NUMBER                                          HEALTH.sub.-- QUESTION.sub.-- TYPE                                                                          CHAR(30)                                        SEQUENCE.sub.-- NUMBER        NUMBER                                          QUESTION.sub.-- LINE1         CHAR(70)                                        QUESTION.sub.-- LINE2         CHAR(70)                                        ______________________________________                                    

The HEALTH₋₋ QUESTION₋₋ RESPONSE 418 entity contains the responses tothe health questions by the prospective applicant. It contains responsesto all of the health questions, be they simplified or medicalunderwriting types.

    ______________________________________                                        Name                Null?     Type                                            ______________________________________                                        HEALTH.sub.-- QUESTION.sub.-- RESPONSE.sub.-- ID                                                  NOT NULL  NUMBER                                          PERSON.sub.-- ID              NUMBER                                          HEALTH.sub.-- QUESTION.sub.-- ID                                                                            NUMBER                                          RESPONSE                      CHAR(255)                                       BEGIN.sub.-- DATE             DATE                                            END.sub.-- DATE               DATE                                            ______________________________________                                    

The IC₋₋ CS₋₋ REGISTER 420 entity is an intersection table usedinternally to resolve the "many-to-many" relationship between insurancecarriers (IC) and corporate sponsors (CS). Since any single corporatesponsor may have agreements with multiple insurance carriers, and anysingle insurance carrier may have agreements with multiple corporatesponsors, this table is required to describe these relationships.

    ______________________________________                                        Name               Null?      Type                                            ______________________________________                                        INSURANCE.sub.-- CARRIER.sub.-- ID                                                               NOT NULL   NUMBER                                          CORPORATE.sub.-- SPONSOR.sub.-- ID                                                               NOT NULL   NUMBER                                          ______________________________________                                    

An ILLUSTRATION 422 is a document (both hard copy and database record)that is produced for a PERSON 452 (prospective applicant) which comparesa conventional mortgage with an insurance collateralized, Ryan Mortgageon a specific property. Multiple illustrations may be produced for asingle prospective applicant illustrating various insurance and loanselections, but each illustration must be owned by a single prospectiveapplicant. A special generic illustration may be created in which most(or all) of the client information is derived from a generic set ofdata. With the exception of the generic illustration, any illustrationmay result in an insurance and loan application. The ILLUSTRATION entitycontains both data and pointers to data for all aspects of anillustration.

    ______________________________________                                        Name                Null?     Type                                            ______________________________________                                        ILLUSTRATION.sub.-- ID                                                                            NOT NULL  NUMBER                                          ILLUSTRATION.sub.-- TYPE      CHAR(10)                                        ILLUSTRATION.sub.-- DATE      DATE                                            STATUS                        CHAR(10)                                        PERSON.sub.-- ID              NUMBER                                          PERSON.sub.-- DOB             DATE                                            PERSON.sub.-- SALARY          NUMBER                                          PERSON.sub.-- INTEREST.sub.-- DIVIDENDS                                                                     NUMBER                                          PERSON.sub.-- OTHER.sub.-- INCOME                                                                           NUMBER                                          COPERSON.sub.-- ID            NUMBER                                          COPERSON.sub.-- DOB           DATE                                            COPERSON.sub.-- SALARY        NUMBER                                          COPERSON.sub.-- INTEREST.sub.-- DIVIDENDS                                                                   NUMBER                                          COPERSON.sub.-- OTHER.sub.-- INCOME                                                                         NUMBER                                          TAX.sub.-- RATE               NUMBER                                          NUMBER.sub.-- OF.sub.-- DEDUCTIONS                                                                          NUMBER                                          PROPERTY.sub.-- ID            NUMBER                                          PROPERTY.sub.-- PURCHASE.sub.-- PRICE                                                                       NUMBER                                          REALTOR.sub.-- ID             NUMBER                                          REALTY.sub.-- FIRM.sub.-- ID  NUMBER                                          COLLATERAL.sub.-- TYPE        CHAR(30)                                        MORTGAGE.sub.-- TYPE          CHAR(30)                                        MORTGAGE.sub.-- VARIETY       CHAR(30)                                        BANK.sub.-- ID                NUMBER                                          BANK.sub.-- OFFICER.sub.-- ID NUMBER                                          MORTGAGE.sub.-- RATE          NUMBER                                          MORTGAGE.sub.-- TERM          NUMBER                                          MORTGAGE.sub.-- POINTS        NUMBER                                          INSURANCE.sub.-- PACKAGE.sub.-- ID                                                                          NUMBER                                          INSURANCE.sub.-- CARRIER.sub.-- ID                                                                          NUMBER                                          INSURANCE.sub.-- AGENT.sub.-- ID                                                                            NUMBER                                          UNDERWRITING.sub.-- TYPE      CHAR(30)                                        HEALTH.sub.-- ANY.sub.-- YESES                                                                              CHAR(1)                                         OTHER.sub.-- COLLATERAL.sub.-- ID                                                                           NUMBER                                          INSURANCE.sub.-- RATE         NUMBER                                          LOAN.sub.-- PACKAGE.sub.-- ID NUMBER                                          CS.sub.-- ID                  NUMBER                                          CS.sub.-- ELIGIBILITY.sub.-- TYPE                                                                           CHAR(10)                                        CS.sub.-- OPEN.sub.-- ELIGIBILITY.sub.-- ID                                                                 NUMBER                                          CS.sub.-- CLOSED.sub.-- ELIGIBILITY.sub.-- ID                                                               NUMBER                                          CS.sub.-- OFFICER.sub.-- ID   NUMBER                                          LOC.sub.-- ID                 NUMBER                                          LOC.sub.-- FS.sub.-- ID       NUMBER                                          LOC.sub.-- ELIGIBILITY.sub.-- ID                                                                            NUMBER                                          LOC.sub.-- FS.sub.-- OFFICER.sub.-- ID                                                                      NUMBER                                          DEATH.sub.-- BENEFIT          NUMBER                                          CC.sub.-- VARIETY             CHAR(10)                                        CC.sub.-- ID                  NUMBER                                          CC.sub.-- TAX.sub.-- ESCROW   NUMBER                                          CC.sub.-- INTEREST.sub.-- ADJUSTMENT                                                                        NUMBER                                          CC.sub.-- LEGAL               NUMBER                                          CC.sub.-- TITLE               NUMBER                                          CC.sub.-- GOVMT               NUMBER                                          CC.sub.-- SURVEY              NUMBER                                          CC.sub.-- HAZARD              NUMBER                                          CC.sub.-- OTHER               NUMBER                                          CC.sub.-- TOTAL               NUMBER                                          CONVENTIONAL.sub.-- MORTGAGE.sub.-- ID                                                                      NUMBER                                          THEPI.sub.-- USER.sub.-- ID   NUMBER                                          CLOSING.sub.-- DATE           DATE                                            CC.sub.-- GRAND.sub.-- TOTAL  NUMBER                                          ______________________________________                                    

The ILLUSTRATION₋₋ RIDERS 424 table, also an intersection table,contains a list of all of the rider clauses required for a particularillustration.

    ______________________________________                                        Name               Null?     Type                                             ______________________________________                                        ILLUSTRATION.sub.-- ID   NUMBER                                               RIDER.sub.-- ID          NUMBER                                               ______________________________________                                    

The INSTITUTION 426 entity is a super entity (like APPLICATION 402)which holds the various institution types. Each specific type ofinstitution (like LENDER, INSURANCE₋₋ CARRIER, etc.) is a view of thistable. There is an INSTITUTION 426 record for every institutionparticipating in the illustration process. The INSTITUTION entity is notshown on the Entity Relationship Diagram (ERD) of FIG. 4. Rather, thespecific views are represented. These are:

    ______________________________________                                               AGENCY (not shown)                                                            EMPLOYER/CORPORATE.sub.-- SPONSOR                                             INSURANCE.sub.-- CARRIER                                                      LENDER                                                                        REALTY.sub.-- FIRM                                                     Name              Null?      Type                                             ______________________________________                                        INSTITUTION.sub.-- ID                                                                           NOT NULL   NUMBER                                           INSTITUTION.sub.-- TYPE      CHAR(30)                                         INSTITUTION.sub.-- NAME      CHAR(50)                                         DIVISION                     CHAR(30)                                         ADDRESS.sub.-- LINE1         CHAR(50)                                         ADDRESS.sub.-- LINE2         CHAR(50)                                         CITY                         CHAR(30)                                         STATE                        CHAR(2)                                          ZIP                          NUMBER(5)                                        PHONE                        NUMBER(10)                                       CONTACT.sub.-- PERSON.sub.-- ID                                                                            NUMBER                                           CORPORATE.sub.-- SPONSOR.sub.-- ID                                                                         NUMBER                                           FINANCIAL.sub.-- SPONSOR.sub.-- ID                                                                         NUMBER                                           CURRENT.sub.-- CREDIT.sub.-- RATE                                                                          NUMBER                                           GUARANTEED.sub.-- CREDIT.sub.-- RATE                                                                       NUMBER                                           AVERAGE.sub.-- CREDIT.sub.-- RATE                                                                          NUMBER                                           ANNUITY.sub.-- CREDIT.sub.-- RATE                                                                          NUMBER                                           MOODYS.sub.-- RATING         NUMBER                                           UNDERWRITING.sub.-- TYPE     CHAR(30)                                         ______________________________________                                    

The INSTITUTION₋₋ OFFICER 428 entity is a super entity (likeAPPLICATION) which holds the various institution officer types. Eachspecific type of institution officer (like LOAN₋₋ OFFICER, INSURANCE₋₋AGENT, etc.) is a view of this table. There is an INSTITUTION₋₋ OFFICERrecord for every institution officer participating in the illustrationprocess. The INSTITUTION₋₋ OFFICER entity is not shown on the ERD ofFIG. 4. Rather, the specific views are represented. These are:

    ______________________________________                                               AGENCY.sub.-- OFFICER (not shown)                                             CORPORATE.sub.-- SPONSOR.sub.-- OFFICER                                       EMPLOYER.sub.-- CONTACT (not shown)                                           INSURANCE.sub.-- AGENT                                                        LOAN.sub.-- OFFICER                                                           REALTOR                                                                       USER                                                                   Name              Null?      Type                                             ______________________________________                                        INSTITUTION.sub.-- OFFICER.sub.-- ID                                                            NOT NULL   NUMBER                                           INSTITUTION.sub.-- OFFICER.sub.-- TYPE                                                                     CHAR(30)                                         LAST.sub.-- NAME             CHAR(50)                                         FIRST.sub.-- NAME            CHAR(30)                                         INSTITUTION.sub.-- ID        NUMBER                                           PHONE                        NUMBER(10)                                       PHONE.sub.-- EXTENSION       NUMBER                                           STATUS                       CHAR(10)                                         ACCOUNT.sub.-- NAME          CHAR(30)                                         PRIVS                        CHAR(10)                                         PRINTER.sub.-- DRIVER        CHAR(20)                                         ______________________________________                                    

The INSURANCE₋₋ PACKAGE 430 entity details the insurance packagesavailable to be chosen for an illustration--the rates, duration, etc.This list can be viewed during the illustration process. If theprospective applicant has chosen an alternative form of collateral (azero coupon bond, for example) this collateral is detailed in theOTHER₋₋ COLLATERAL 444 entity. The database entity is OTHER₋₋ COLLATERALcapable of storing information regarding other types of securities, terminsurance, and the type of account in which the securities are held(e.g., IRA, Keough Account, or other tax-favored account.) For anindividual illustration, OTHER₋₋ COLLATERAL 444 and INSURANCE₋₋ PACKAGE430 are mutually exclusive.

    ______________________________________                                        Name                Null?     Type                                            ______________________________________                                        INSURANCE.sub.-- PACKAGE.sub.-- ID                                                                NOT NULL  NUMBER                                          POLICY.sub.-- NAME            CHAR(50)                                        PREMIUM.sub.-- PAYMENT.sub.-- STRUCTURE                                                                     CHAR(10)                                        POLICY.sub.-- TYPE            CHAR(10)                                        INSURANCE.sub.-- CARRIER.sub.-- ID                                                                          NUMBER                                          INSURANCE.sub.-- AGENT.sub.-- ID                                                                            NUMBER                                          POLICY.sub.-- TERM            NUMBER                                          CURRENT.sub.-- RATE           NUMBER                                          GUARANTEED.sub.-- RATE        NUMBER                                          UNDERWRITING.sub.-- TYPE      CHAR(30)                                        BEGIN.sub.-- DATE             DATE                                            END.sub.-- DATE               DATE                                            PAPER.sub.-- FORM.sub.-- ID   NUMBER                                          MOODYS.sub.-- RATING          CHAR(3)                                         ______________________________________                                    

The INSURANCE₋₋ POLICY 432 entity contains data specific for a policyissued as a result of an illustration.

    ______________________________________                                        Name               Null?       Type                                           ______________________________________                                        INSURANCE.sub.-- POLICY.sub.-- ID                                                                NOT NULL    NUMBER                                         INSURANCE.sub.-- CARRIER.sub.-- ID                                                                           NUMBER                                         ______________________________________                                    

The LOAN₋₋ AGREEMENT 434 entity contains data specific for a loanagreement issued as a result of an illustration.

    ______________________________________                                        Name               Null?       Type                                           ______________________________________                                        LOAN.sub.-- AGREEMENT.sub.-- ID                                                                  NOT NULL    NUMBER                                         BANK.sub.-- ID                 NUMBER                                         ______________________________________                                    

The LOAN₋₋ PACKAGE 436 entity details the Ryan Mortgage authorizedlender loan packages available to be chosen for an illustration--therates, duration, etc. This list can be viewed during the illustrationprocess.

    ______________________________________                                        Name             Null?       Type                                             ______________________________________                                        LOAN.sub.-- PACKAGE.sub.-- ID                                                                  NOT NULL    NUMBER                                           STATE                        CHAR(2)                                          TYPE                         CHAR(30)                                         MORTGAGE.sub.-- RATE         NUMBER                                           POINTS                       NUMBER                                           BEGIN.sub.-- DATE            DATE                                             END.sub.-- DATE              DATE                                             LOAN.sub.-- TERM             NUMBER                                           BANK.sub.-- ID               NUMBER                                           BANK.sub.-- OFFICER.sub.-- ID                                                                              NUMBER                                           PAPER.sub.-- FORM.sub.-- ID  NUMBER                                           ______________________________________                                    

The LETTER OF CREDIT (LOC) 438 entity contains data on the availableirrevocable letters of credit available to be chosen for anillustration. The LOC can be used in lieu of a corporate sponsoredpremium guarantee, where the prospective applicant would choose not tohave the lump-sum prepayment. The lump-sum prepayment, corporatesponsored premium guarantee, and the irrevocable letter of creditpremium guarantee are all mutually exclusive.

    ______________________________________                                        Name           Null?        Type                                              ______________________________________                                        LOC.sub.-- ID  NOT NULL     NUMBER                                            FS.sub.-- ID                NUMBER                                            LOC.sub.-- COST             NUMBER                                            ______________________________________                                    

The LOC₋₋ ELIGIBILITY 440 entity contains the specific eligibilityrequirements for each irrevocable letter of credit available for use inan illustration.

    ______________________________________                                        Name             Null?       Type                                             ______________________________________                                        FS.sub.-- ELIGIBILITY.sub.-- ID                                                                NOT NULL    NUMBER                                           FS.sub.-- ID                 NUMBER                                           ______________________________________                                    

The NEW₋₋ INSURANCE₋₋ DEV 468 entity contains primarily textual datadescribing the new insurance developments in the industry that are andwill be available to a prospective applicant in creating a RyanMortgage.

    ______________________________________                                        Name               Null?      Type                                            ______________________________________                                        NEW.sub.-- INSURANCE.sub.-- DEV.sub.-- ID                                                        NOT NULL   NUMBER                                          INSURANCE.sub.-- CARRIER.sub.-- ID                                                                          NUMBER                                          NEW.sub.-- INSURANCE.sub.-- DEV.sub.-- TEXT                                                                 CHAR(255)                                       ______________________________________                                    

The NEW₋₋ LOAN₋₋ DEV 442 entity contains primarily textual datadescribing the new loan developments in the industry that are and willbe available to a prospective applicant in creating a Ryan Mortgage.

    ______________________________________                                        Name              Null?       Type                                            ______________________________________                                        NEW.sub.-- LOAN.sub.-- DEV.sub.-- ID                                                            NOT NULL    NUMBER                                          BANK.sub.-- ID                NUMBER                                          NEW.sub.-- LOAN.sub.-- DEV.sub.-- TEXT                                                                      CHAR(255)                                       ______________________________________                                    

The OTHER₋₋ COLLATERAL 444 entity contains data on other instrumentsthat are used to secure a Ryan Mortgage. The OTHER₋₋ COLLATERAL₋₋ IDnumber identifies the type of investment instrument to be illustrated.Other instruments may include, for example, term insurance used inconjunction with a security, such as a zero coupon bond, or terminsurance used in conjunction with a deferred annuity. Each of theseinstruments, like a universal life policy, may be used in place of adown payment to provide a means of accumulating the principal needed torepay the mortgage. This data base entity is also capable of storing thetype of account that the security is held in. TAX₋₋ STATUS identifiesthe kind of account that the investment is held in and may includeinformation regarding a Keough Account, Individual Retirement Account,Profit Sharing Plan, 401k plan, or other tax-favored investment account.The tax status of the account in which the investment is held isimportant, as it dictates the amount and timing of the taxes payable onthe investment's earnings. This, in turn, dictates the amount ofup-front payment required for the mortgage transaction, as well as anytax escrows which may be required.

    ______________________________________                                        Name               Null?      Type                                            ______________________________________                                        OTHER.sub.-- COLLATERAL.sub.-- ID                                                                NOT NULL   NUMBER                                          TAX.sub.-- STATUS             NUMBER                                          ______________________________________                                    

The PAPER₋₋ FORM 446 entity describes the individual paper form for thespecific mortgage loan and insurance application forms, illustrationforms, and health questionnaires used by the system. It holds globalinformation regarding the form, (e.g., WordPerfect merge file name). Itis pointed to by the individual PAPER₋₋ FORM₋₋ ITEM.

    ______________________________________                                        Name              Null?       Type                                            ______________________________________                                        PAPER.sub.-- FORM.sub.-- ID                                                                     NOT NULL    NUMBER                                          PRIMARY.sub.-- MERGE.sub.-- FILE                                                                            CHAR(30)                                        ______________________________________                                    

The PAPER₋₋ FORM₋₋ ITEM 448 entity contains the specific "select data"instructions that are used to retrieve the prospective applicant datathat will then be written to a paper form, e.g., the prospectiveapplicant's name. Any PAPER₋₋ FORM₋₋ ITEM 448, like the prospectiveapplicant's name, may be used in multiple paper forms throughout thesystem, which allows for non-redundant storage of common informationbetween forms.

    ______________________________________                                        Name               Null?      Type                                            ______________________________________                                        PAPER.sub.-- FORM.sub.-- ITEM.sub.-- ID                                                          NOT NULL   NUMBER                                          NAME                          CHAR(30)                                        SEL                           LONG                                            ADDITIONAL.sub.-- RESPONSE.sub.-- ITEM                                                                      CHAR(1)                                         PROMPT                        CHAR(255)                                       ______________________________________                                    

The PAPER₋₋ FORM₋₋ ITEM₋₋ REGISTER 450 entity is an intersection tablethat resolves the "many-to-many" relationship between the PAPER₋₋ FORMand PAPER₋₋ FORM₋₋ ITEM tables, and details which paper forms containwhich items, and which items belong to which forms.

    ______________________________________                                        Name                Null?    Type                                             ______________________________________                                        PAPER.sub.-- FORM.sub.-- ID  NUMBER                                           PAPER.sub.-- FORM.sub.-- ITEM.sub.-- ID                                                                    NUMBER                                           SEQ                          NUMBER                                           ______________________________________                                    

A PERSON 452 (applicant) is defined as a person or husband/wife couplewho collectively request an illustration. A PERSON file may contain twoinsureds and/or borrowers. Two insureds could have, for example, twoseparate policies with coverage proportional to their share of thecombined household income. Two insureds' policies are calculatedseparately then combined in a composite illustration for the two-insuredPERSON. Two insureds may also own a single policy. A single policyoption for two insureds includes a joint and survivor policy whereindeath benefits are paid upon the death of the second insured to die, anda joint life policy which pays a death benefit on the death of the firstinsured. Each PERSON may have requested multiple illustrations.

    ______________________________________                                        Name               Null?     Type                                             ______________________________________                                        PERSON.sub.-- ID   NOT NULL  NUMBER                                           COPERSON.sub.-- ID           NUMBER                                           PERSON.sub.-- TYPE           CHAR(10)                                         LAST.sub.-- NAME             CHAR(50)                                         FIRST.sub.-- NAME            CHAR(30)                                         MIDDLE.sub.-- NAME           CHAR(30)                                         ADDRESS.sub.-- LINE1         CHAR(50)                                         ADDRESS.sub.-- LINE2         CHAR(50)                                         CITY                         CHAR(30)                                         STATE                        CHAR(2)                                          ZIP                          NUMBER(5)                                        PHONE                        NUMBER(10)                                       DOB                          DATE                                             DATE.sub.-- OF.sub.-- DEATH  DATE                                             SEX                          CHAR(1)                                          MARITAL.sub.-- STATUS        CHAR(10)                                         EMPLOYMENT.sub.-- STATUS     CHAR(10)                                         INTEREST.sub.-- DIVIDENDS    NUMBER                                           OTHER.sub.-- INCOME          NUMBER                                           INCOME.sub.-- TAX.sub.-- RETURN.sub.-- TYPE                                                                CHAR(10)                                         THEPI.sub.-- USER.sub.-- ID  NUMBER                                           STATE.sub.-- OF.sub.-- RESIDENCE                                                                           CHAR(2)                                          STATE.sub.-- OF.sub.-- EMPLOYMENT                                                                          CHAR(2)                                          ______________________________________                                    

The PROPERTY 454 is the real estate (land, dwelling, etc.) on which theillustration is being drawn up.

    ______________________________________                                        Name             Null?       Type                                             ______________________________________                                        PROPERTY.sub.-- ID                                                                             NOT NULL    NUMBER                                           ADDRESS.sub.-- LINE1         CHAR(50)                                         ADDRESS.sub.-- LINE2         CHAR(50)                                         CITY                         CHAR(30)                                         STATE                        CHAR(2)                                          ZIP                          NUMBER(5)                                        APPRAISAL.sub.-- VALUE       NUMBER                                           PURCHASE.sub.-- PRICE        NUMBER                                           PROPERTY.sub.-- SPECIFICS    CHAR(50)                                         PERSON.sub.-- ID             NUMBER                                           ______________________________________                                    

The RIDER 456 entity describes the insurance riders available for use inthe illustration process. A policy rider is an amendment attached to apolicy that modifies the conditions of the policy by expanding, ordecreasing its benefits or excluding certain conditions from coverage.Typical examples of policy riders include disability income riders whichpay a benefit equal to the mortgage cost in the event the insured(s) aredisabled and waiver of premium riders (typically used in conjunctionwith disability riders to waive the cost of insurance charges in thepolicy in the event the insured is disabled).

    ______________________________________                                        Name           Null?        Type                                              ______________________________________                                        RIDER.sub.-- ID                                                                              NOT NULL     NUMBER                                            RIDER.sub.-- TYPE           CHAR(10)                                          RIDER.sub.-- TEXT           CHAR(255)                                         ______________________________________                                    

The UPDATE₋₋ ACTIVITY 458 entity is an internal table that is used tokeep track of the dates of supervisory update and modificationoperations made to the various reference tables (e.g., INSURANCE₋₋PACKAGE 430, LOAN₋₋ PACKAGE 436, etc.).

    ______________________________________                                        Name              Null?     Type                                              ______________________________________                                        UPDATE.sub.-- TYPE          CHAR(30)                                          UPDATE.sub.-- DATE          DATE                                              VALID.sub.-- THRU.sub.-- DATE                                                                             DATE                                              ______________________________________                                    

The MORT₋₋ REGISTER 460 entity documents the association of groupnumbers with various combinations of prospective applicant attributesand insurance products.

    ______________________________________                                        Name            Null?       Type                                              ______________________________________                                        GROUP.sub.-- NUMBER                                                                           NOT NULL    NUMBER                                            GROUP.sub.-- NAME           CHAR(25)                                          DESCRIPTION                 CHAR(255)                                         YS                          NUMBER                                            ______________________________________                                    

This table documents the association of group numbers with the variouscombinations of attributes possible:

    ______________________________________                                        Male/Female                                                                   Smoking/Non-smoking/Aggregate                                                 Age last/Age nearest                                                          Insurance Product                                                             CSO table/COI table                                                           For example:                                                                  GROUP.sub.-- NUMBER                                                                       YS    GROUP.sub.-- NAME                                                                         DESCRIPTION                                     ______________________________________                                        1           0     CSO-M-N-AL  CSO table Male/Non-                                                           smoking/Age last                                2           0     CSO-F-N-AL  CSO table Female/Non-                                                         smoking/Age last                                3           0     CSO-M-S-AL  CSO table Male/                                                               Smoking/Age last                                .           .     .           .                                               .           .     .           .                                               .           .     .           .                                               100         8     METRO-117   Metro 117 table; Male/                                                        Non-smoking/Age last,                                                         commonly used by                                                              sponsored policies                              ______________________________________                                    

The "description" data in MORT₋₋ REGISTER is simply that. It describesthe attributes of each table for use in managing the system. During theillustration process the system uses another database entity to selectwhich of the MORT₋₋ REGISTER tables are applicable to a particularproduct. The actual logical selection of which table is to be used foreach combination is accomplished by entries in the INSURANCE₋₋ PACKAGE430 table, which describes in detail each insurance product available tothe system, and which, through its associated detail tables, points tothe particular MORT₋₋ REGISTER Groups to be used, for eachsex/smoking/etc. combination, in illustrating that particular product,referring to each group by its GROUP₋₋ NAME.

MORT 462 tabulates mortality figures (either in strict deaths perthousand or cost of insurance). While the common mortality tables (CSOand the like) and the product specific Cost Of Insurance (COI) tablesare essentially the same, there are some differences.

Both conceptual tables are housed inside one relational database tablestructure (MORT 462) to allow for ease of access. The relational table'sstructure for the MORT 462 table follows:

    ______________________________________                                        Name             Null?       Type                                             ______________________________________                                        GROUP.sub.-- NUMBER                                                                            NOT NULL    NUMBER                                           AGE.sub.-- OF.sub.-- ISSUE   NUMBER                                           YEAR                         NUMBER                                           MORTALITY                    NUMBER                                           ______________________________________                                    

The MORT 462 table is organized into groups of records, each grouphaving the same GROUP₋₋ NUMBER. A group is a "Mortality Table." Eachcombination of the following attributes will reference a GROUP₋₋ NUMBER:

Male/Female

Smoking/Non-smoking/Aggregate

Age last/Age nearest

Insurance Product

CSO table/COI table

A GROUP₋₋ NUMBER may be used by any combination. Therefore, for aparticular Group (mortality table), for example, the 1980 CSO table forMale/Non-smoking/Age last (no product designation in this case), thereare records for ages 18 through 99 as shown below:

    ______________________________________                                        GROUP.sub.-- NUMBER                                                                       AGE.sub.-- OF.sub.-- ISSUE                                                                 YEAR    MORTALITY                                    ______________________________________                                        1           NULL         18       12.0                                        1           NULL         19       20.0                                        .           .            .        .                                           .           .            .        .                                           .           .            .        .                                           1           NULL         99       1000.0                                      ______________________________________                                    

Note that in the case of the CSO tables, there is nothing in the AGE₋₋OF₋₋ ISSUE column (NULL). So, to reference the CSO Group thatcorresponds to Male/Non-smoking/Age last, the system retrieves allrecords for GROUP₋₋ NUMBER+1.

To satisfy all combinations of the above attributes for the CSO tables(Male/Female, Smoking/Non-smoking/Aggregate, Age last/Age nearest) thereare as many as 12 groups, each group having entries for ages 18 through99 years of age. Thus, there will be 82 (i.e., 99-18+1) rows (i.e.,records) in each group, one for each year of age, times each of the 12combinations, resulting in 984 records for the collection of all 12 CSOgroups. Like the common mortality groups (mortality tables), the COIgroups (mortality tables) are organized by GROUP₋₋ NUMBER. The GROUP₋₋NUMBER in this case segregates groups not only by sex, smoking, etc.,but also by insurance product. But unlike the common mortality tables,there is a sub-group structure to the mortality table based on theprospective applicant's age at the time of policy issue. There is aspecial "sub-table," selected by the prospective applicant's age, asdesignated by the AGE₋₋ OF₋₋ ISSUE column, that is used for the first YSyears. The AGE₋₋ OF₋₋ ISSUE entry specifies the select versus ultimateportions of the mortality table. If the AGE₋₋ OF₋₋ ISSUE column is NULL,then that series of records correspond to the ultimate series withinthat particular insurance product group. The CSO mortality table, then,is a standard mortality table with YS=O (i.e., no select entries).

One further difference is that the year/age column designates age of theinsured for ultimate groups, but designates year of policy for selectgroups.

An applicant's cost of insurance will be determined by selecting therows corresponding to a particular group number (which may be for aspecific insurance product and a specific collection of attributes suchas sex, smoking, etc.) for the applicant's AGE₋₋ OF₋₋ ISSUE. There willbe typically 10 or less rows (YS) within a particular AGE₋₋ OF₋₋ ISSUEsub-group. For years beyond the YS years, the ultimate group is used,which is retrieved by selecting the rows for this GROUP₋₋ NUMBER whoseAGE₋₋ OF₋₋ ISSUE is NULL and whose "year/age" entries are AGE₋₋ OF₋₋ISSUE+YS and greater.

An example of a COI group is given below:

    ______________________________________                                        GROUP.sub.-- NUMBER                                                                       AGE.sub.-- OF.sub.-- ISSUE                                                                 YEAR    MORTALITY                                    ______________________________________                                        5           35            1       12.0                                        5           35            2       20.0                                        .           .            .        .                                           .           .            .        .                                           .           .            .        .                                           5           35           10       100.0                                       .           .            .        .                                           .           .            .        .                                           .           .            .        .                                           5           40            1       22.0                                        5           40            2       50.0                                        .           .            .        .                                           .           .            .        .                                           .           .            .        .                                           5           40           10       500.0                                       .           .            .        .                                           .           .            .        .                                           .           .            .        .                                           5           NULL         10       2.0                                         5           NULL         11       5.0                                         .           .            .        .                                           .           .            .        .                                           .           .            .        .                                           5           NULL         99       1000.0                                      ______________________________________                                    

The above shows two of the select sub-groups (for age of issue 35 and40) for COI group 5, as well as the ultimate group (age of issue=NULL)for COI group 5. (Subgroups will be present for all possible AGE₋₋ OF₋₋ISSUE values.)

The COI group 5 may be used by any insurance product. This associationof product to group (mortality table) is managed by the MORT₋₋ REGISTER460 table.

The CORPORATE₋₋ SPONSOR₋₋ GUARANTEE 464 entity contains data on thecorporate guarantees available to be chosen for an illustration. Thecorporate sponsor guarantee is only available to those prospectiveapplicants with a participating employer and can be used where aprospective applicant prefers not to use a lump-sum prepayment.

    ______________________________________                                        Name          Null?        Type                                               ______________________________________                                        CSG.sub.-- ID NOT NULL     NUMBER                                             CS.sub.-- ID               CHAR(10)                                           ______________________________________                                    

The HEALTH₋₋ QUESTIONNAIRE 466 entity is used to register the individualquestions that comprise a specific health questionnaire. Depending onthe question and questionnaire, a specific question may appear inmultiple questionnaires.

    ______________________________________                                        Name                Null?      Type                                           ______________________________________                                        HEALTH.sub.-- QUESTIONNAIRE.sub.-- ID                                                             NOT NULL   NUMBER                                         HEALTH.sub.-- QUESTIONNAIRE.sub.-- NAME                                                                      CHAR(30)                                       ______________________________________                                    

B. Discussion of Variables

The following variables, identities, and formulas show how the insuranceand mortgage illustrations of the kind previously described are computedin a preferred embodiment of the invention. Because these variables areused throughout the illustration process, references to how and wherethey are used will include multiple Figures and Blocks. Every effort,however, has been made to illustrate the flow of system logic in thedescription of the variables and computations.

LNUM: This is the number of annual insurance premiums. This is a systemparameter. Two possibilities exist in a preferred embodiment of theinvention: (1) Assuming an annuity, this value is four and is theminimum normally allowed under legal definitions of insurance; or (2)Assuming a non-annuity, this number is typically ten, but could rangefrom four to the total number of years in the mortgage. These values arenot user selectable but may be system adjusted.

LIFPAY: This is the annual premium required. This value is computed. Thesystem assumes a value in Blocks 108, 116, 124, and 126, and evaluatesthe formulas in Block 110. The system uses iterative approximation tofind the value that will produce the needed insurance, and the cashvalue. Then, the system iterates if needed on the illustrated insurancevalues to test if the value computed meets the regulatory definition ofinsurance in Block 128. The variable, once computed, is also used toshow contract performance assuming guaranteed interest and mortalitycharges apply in Block 134.

PRIN: Initially, this is equal to the value of the property beingfinanced but may also be equal to the sum borrowed. A default value isassumed in Block 72 of FIG. 3A-1. It is a system input in Block 176 ofFIG. 3B-2. The death benefit of the insurance must equal this value, ata minimum. The death benefit may be higher, for certain options, if theregulatory tests are not met at this value.

a₁ : This is the age of the insured for the first year of the policy. Itis computed from the birth date solicited in Block 170 or soliciteddirectly in Block 72.

The birth date is a system input. Each product has a parameter, usingthe "nearest" or "last" birthday which defines how the birth date isused to compute a₁. An insured stays this age for the first year of thepolicy. The age is incremented at each policy anniversary. The policyanniversary date is the date when the policy is sold. For illustrationpurposes, the policy anniversary date is equal to the estimated closingdate, a system input.

Because changes in birth date in relation to closing date can changepolicy charges, any non-final illustration in FIG. 3B-8, Block 160, andFIG. B7, Block 152 may include a disclaimer in its output to the effectthat a delay in making the application may result in changes to theprojections, comparisons, and costs.

inlp: This is the percentage discount rate for a Guideline Level Premium(GLP) value calculation which is computed in FIG. 3B-6, Block 128. Thesystem stores this information by product. The variable, mlp=monthlymultiplier=(1+inlp)^(1/12), is computed upon use of inlp.

insp: This is the discount rate, expressed as a percentage, for theGuideline Single Premium (GSP) value calculation which is computed inFIG. 3B-6, Block 128. The system stores this information by product. Thevariable, msp=monthly multiplier=(1+insp)^(1/12), is computed upon useof insp.

The mortality table data discussed below is stored as percentages. Thesystem stores all percentages as such. All formulas assume thefractional equivalent which is the value divided by one hundred. Thestored values, however, are not generally integers.

CSO(a): All values from the Commissioner's Standard Ordinary Table, acommon mortality table published in 1980, are stored in deaths/1000 atage a. These are real numbers. The system allows up to five placeaccuracy after the decimal point, i.e., xxx.xxxxx.

The table, as it is used by the system, is tabulated for ages eighteento ninety-nine. This table is used for GSP and GLP calculations in FIG.3B-6, Block 128 and is therefore a system parameter. The system containsseveral versions of the 1980 CSO tables. They include: Male/Female,Smoking/Nonsmoking/Aggregate, and Age last/Age nearest. The systemcontains, therefore, a total of 2×3×2=12 tables. Table entries appear asa value per thousand and are used to obtain a fractional probability ofdeath. Each product indicates whether to use the male/female tables inaccordance with the sex of the insured, or whether to use a blend. If ablend is indicated, the product data table indicates the percentagemale. The remainder is female. An exception table exists, by state, foreach product. Multiple products may be present in the system for asingle carrier and all use this same exception table. However, this isnot a system rule. There is not a unique exception table for everyproduct, but a given exception table may apply to any number ofproducts, including just one. If an entry is present, it mandates theblend percentage male to use for policies issued in that state for theproduct(s) referencing that table. That blend percentage will overrideany generic male/female or blend selection in the product. This featureis a system requirement because some states require the use of unisextables weighted exactly in proportion with the carrier's male/femaleweighting of its existing insured population.

A_(max) : This is the variable for the assumed maximum survival age.This is a system parameter. Typically, it is age ninety-five orninety-nine. For the sake of consistency, this document has assumed ageninety-nine throughout its discussion.

NYR: This is the variable for mortgage length, usually 30 years. This isa system parameter. The system manager can change this variable usingthe aforementioned super user function. The system is capable ofillustrating other mortgage lengths, and permitting user selection ofvarious mortgage lengths in FIG. 3B-2, Block 182. This capability isneeded as lenders offer alternative length mortgages.

MTH: This is the variable for the number of months in the mortgage. Itis computed as:

    =12×NYR

LEXP(n): This is the variable for per-policy expenses, in month n. Thecost is independent of the premium size and the prospective applicant'scharacteristics. It is dependent, however, on month and SpecifiedAmount, SA. A table exists for each product to store this information.Each table entry, for month n of the insurance period, contains twovalues: a fixed dollar amount, LEXPF(n), and, a percentage amountexpressed as cost as a percentage of SA: LEXPV(n).

On use in FIG. 3B-5, Block 110 and FIG. 3B-6, Blocks 128 and 134, thesystem computes ##EQU1##

In month one, the system adds LEXPSELL, a one time charge by product toLEXP(n).

LPCT(n): This variable is the percent-of-premium expense charged by thecarrier, in a given month n. For each product, the system develops a"table" of values, generated from parameters for that product. Itlikewise is used in FIG. 3B-5, Block 110 and FIG. 3B-6, Blocks 128 and134.

For each combination of the criteria below which a product uses, thesystem contains six values. These values are reflected using flags for aparticular product's criteria. LPCT1A and LPCT1B are the initial values,LPCT2A and LPCT2B are the continuing values, and LPCTY is the yearnumber (of the policy) at the beginning of which the system switchesbetween pairs 1 and 2. ##EQU2## for x=A and B

LPCTSA: This variable is the break ratio, in dollars per thousanddollars of Specified Amount or basic death benefit, SA. (The formula forSpecified Amount appears later in the formula description text.) This isused to compute a breakpoint value for LPCT(n).

    LPCTBRK=LPCTSA×SA

Then, when the equations call for applying LPCT(n), the system usesLPCTA(n) on the first LPCTBRK dollars, and LPCTB(n) on the remainder. IfLPCTSA=0, there is no break and, for ease of computation, the systemstores equal values for the A and B versions.

The following variables store mortgage repayment plan informationsolicited in FIG. 3B-4, Block 98.

LOPT: This is the loan repayment option referred to earlier in thedocument. It is selected by the user.

LOPT=0: This variable assumes the mortgage is to be paid off with theafter-tax insurance cash surrender value after MTH months.

LOPT=1: This variable assumes the mortgage is to be paid off with a lifeinsurance policy loan secured by the insurance cash value, after MTHmonths. The interest on the loan is paid by further borrowing. Thesystem guideline is net remaining cash value just greater than zero atA_(max).

LOPT=2: This loan repayment option assumes the mortgage is rolled overand is paid off by the death benefit when the insured dies. The insuredstarts borrowing against the cash value to pay the mortgage interestafter MTH months. The system tracks cumulative borrowing, per LOPT=1.The system assumes the same premium as is solved for assuming LOPT=1.

iCL: This is the annual policy loaned funds interest rate. It is storedby product. This is the cost of policy loan interest. Carriers computethis figure in one of two ways. Therefore, the system uses a flag foriCL, by product. Based on this flag, the system uses interest in arrearsor in advance formulas in the computation of policy loans in FIG. 3B-5,Block 110. The system computes, at the start of the illustration for aspecific product, the monthly compounding multiplier:mCL=(1+iCL)^(1/12).

Qx(a): This variable represents the annual cost of insurance at attainedage a. The data is contained in multiple tables. The data is stored byproduct. However, a single set of tables, with state exceptions (pleasesee below), may service multiple products. The data is stored as realvalues, in terms of mortality per 1000. Wherever used in a formula inthis patent application, it should be understood that the value used isthe probability of dying at age ##EQU3## This variable is used in thecomputation of cash value and death benefit amounts in FIG. 3B-5, Block110.

qx(a): This is a table for the monthly cost of insurance values. It isshown as a computed value in the formulas, as computed from Qx(a). Thesystem allows for a product to point to tables, directly, in the samestructure, for example Selectltimate, and with the same selectioncriteria, sex, smoking, etc., and sponsored/unsponsored flags as Qx(a).

The following statements apply to both Qx(a) and, if present, qx(a).Every Qx and qx table in the system is in two parts, Select andUltimate, either of which may be empty. It is rare for part two, theUltimate Table, to be empty. The Select Table is empty more frequently.The first part is the Select table. The select table is actually a tableof tables. (See also the MORT and MORT₋₋ REGISTER table discussion foradditional information on Select and Ultimate tables.)

The Ultimate table has entries for attained age from Y_(s) to 100(maximum), that apply for those attained ages, after the first Y_(s)years have elapsed. For example, assume Y_(s) =8, for a policy issued atattained age of 35. The system uses the entries in the Select table, forthe age at issue=35, for the first 8 years, then uses the Ultimatetable, thereafter. The system from there on will use the entry forattained-age=43 for year 9, 44 for year 10, etc. Therefore, an importantparameter stored by the system by product is which table to use. A tableis described by Selectltimate breakpoint (in years), and the two actualtables, the first of which has two dimensions, and the second of which,is a vector.

In summary, a single set of mortality tables may apply to many products,or to just one. The system tracks the tables by carrier and product.These variables are used in the computation of death benefit and cashvalue amounts in Block 110 of FIG. 3B-5.

The number and application of tables in each set is specified for agiven set of tables by the following product-specific flags:

Smoking/Nonsmoking tables, or just Aggregate Tables.

Preferred/Nonpreferred risk tables, or no selection on risk.

Male, Female, and Unisex tables, or just Unisex tables.

The Unisex table subset includes a table to be used in other thanexception states, with auxiliary tables for specific states. A systemexception list contains specific states for which Unisex rating isrequired and, if so, whether to use the standard Unisex table, or thename of a special table for that state. If normally the product selectsbetween male/female tables, the system will instead use the Unisex tableif mandated for that State by state regulatory guidelines. In addition,a separate product flag indicates if the Unisex table is to be used forany sponsored applicant (guaranteed premiums). Finally, in the sponsortable, a flag indicates whether that sponsor mandates the use of theUnisex table.

The system uses a group of default tables, characterized as 1983 GAMMortality, which is a typical mortality assumption. However, otherdefault tables may be used at the system operator's discretion. Thesetables are used for illustrations when no other mortality data is listedfor a product. There are four 1983 GAM tables: Nearest age, or last age,and male, female. A flag in a product record will indicate whether ornot to use these mortality tables and, if so, the default malepercentage to use when blending for Unisex. The system default for thestate exception table that mandates unisex rating also mandates the malepercentage value. The system default also uses the same mortality tablefor life insurance in the Ryan Mortgage and the conventional mortgageterm insurance.

The system also allows for the input of a rating factor for high risk,separately underwritten prospective applicants, qf. Its default value is100%. The system formulas use qf× qx (or Qx) wherever the equations useqx (or Qx). This input will not be under the prospective applicant'scontrol. Rather, it is provided by the system owner's operations staffor the carrier's staff. If rating is required, it triggers thegeneration of a new illustration, otherwise the same as the oldillustration, except that the mortality charges will be based on arating factor. The illustration is of a single product and will beprinted by the system locally and mailed to the prospective applicantseparately.

Set out below are a number of computational flags:

qx guideline guarantee flag: If set, qx is computed from Qx, or istabular and is used for the first year instead of qxg in the guidelinepremium computations.

qx minimum guaranteed interest projection flag: If set, qx is computedfrom Qx, or is tabular and is used for the first year, instead of qxg,in the minimum guaranteed interest projection.

qxg(a): This is a special set of qx tables, the guaranteed monthly costof insurance. Each is a simple table of values versus attained age.There is no Select table, just Ultimate. The system stores thisinformation by product. A data set consists of a standard table product,plus special table(s) for specific states. For example, a product usesits standard qxg except for certain states. Each special state presentpoints to a qxg table, but multiple special states may use the samespecial qxg table.

The table, standard, or special for each state, is actually several.Tables appear by sex, smokingonsmoking/aggregate, age last/next, inparallel with the CSO tables. However, there is not a blend percentagefor producing a unisex table for a state; rather, an explicit Unisextable is present, with the possibility of different tables for differentstates, and, again, a state flag that mandates the use of a Unisextable, overriding the product preference.

The formula below is used in refining the gLP and gSP.

A product flag, if set, indicates that the formula approximation is tobe used. If so, the qxg(a) value is computed from the correspondingCSO(a) value as: ##EQU4##

CORR(a): The guideline premium corridor is the minimum insurancecoverage or death benefit permissible under law. The death benefitcomputed in FIG. 3B-5, Block 110 is this factor times cash value. Thevalues are expressed as a percent of cash value, (e.g., 250 is 2.5 timescash value). The corridor data consists of a single table, by attainedage. No male/female or other differentiation is made in the computation.

iC1, iC2, iCbreak: These flags identify current policy credited rates asa percentage of unloaned funds, and the breakpoint value on the dollaramount at which to switch from iC1 to iC2 by product. The system alsoallows for a no breakpoint case. The system computes, and then saves foruse in formulas, the monthly rates:

    iC1.sub.m =(1+iC1).sup.1/12 -1

    iC2.sub.m =(1+iC2).sup.1/12 -1

iC guideline guarantee flag: If this flag is set, iC1 and iC2 areguaranteed for the first year, in guideline premium computations.

iC minimum interest guarantee flag: If this flag is set, iC1 and iC2 areguaranteed for the first year of the minimum guaranteed interestprojection.

iL: This variable represents the annual policy loan credited rate for aparticular product. The system computes, then saves for use in formulas,the monthly rate:

    iL.sub.m =(1+iL).sup.1/12 -1

TAXRATE: This variable represents the prospective applicant's taxbracket. This is a user input entered in FIG. 3B-1, Block 174. Thesystem default used in FIG. 3A-1 is 30 percent.

Set out below are formulas for the life insurance and mortgagecomputations of the system. #: Indicates a computation which isindependent of life insurance policy size. These computations aretherefore out of the illustration system's iterative loop. *: Indicatesa computation which is product independent and is therefore standard forall products.

LPAY(n): This is the premium paid in month n. The system computes afirst trial value as to the value for LPAY(1) in FIG. 3B-5, Block 108,then makes iterative trials as to the correct amount. ##EQU5## Thepremium is paid annually, in the beginning of each year's first month.

LBASIS(n): This is the value for cumulative premiums paid to date,including the month n. It is computed as: ##EQU6## #* a_(t) : This isthe variable for the insured's age in year t of the policy.

    =a.sub.1 +(t-1)

This variable is used in equations which calculate annual amounts.

a_(n) =: This variable tracks the insured's age in month n. It is usedfor age nearest/age last computations.

    =a.sub.int (n+11)/12!, where int is the integer function.

#* Q(t): This is the variable for the probability of death, during yeart, using the 1980 CSO table, a common mortality table used in thesystem's regulatory compliance computations in FIG. 3B-6, Block 128.Carriers commonly use this table in the calculation of guaranteedmortality. It is computed as: ##EQU7## #* P(t): This variable representsthe probability of not dying in a given year. It is computed as:

    =1-Q(t)

#* tP(t): This variable represents the probability of surviving throughyear t. It is computed as: ##EQU8## #* N_(max) : This variablerepresents the maximum number of policy years. It is computed inrelation to the insured's ninety-fifth or ninety-ninth birthday, as:

    =A.sub.max -a.sub.1 +1

Initially, the system uses the regulatory guideline formulas to developan estimate of the appropriate insurance to cash value relationship. Thesystem calculates estimates of the regulatory guideline premium amounts,and uses them as a basis for computing cash value and death benefitamounts in the system in FIG. 3B-5, Block 110. The initial estimates useapproximations of the Guideline Single, Guideline Level, and GuidelineSeven Pay Premium amounts. The variables for these approximations, andformulas for computing them, are set out below.

gSP: This is a variable for the estimated Guideline Single Premium(GSP). The variable is calculated as a fraction of coverage, expressedin dollars. It is first calculated as: ##EQU9##

gLP: This is the variable for the estimated Guideline Level Premium(GLP). The variable is calculated as a fraction of coverage, expressedin dollars. It is calculated as: ##EQU10##

7LP (or "SLP"): This is the variable for the estimated Guideline SevenPay Premium. This variable is likewise calculated as a fraction ofcoverage, expressed in dollars. It is calculated as: ##EQU11##

SA: This is the variable for the policy's Specified Amount. TheSpecified Amount, a common life insurance expression, is equal to thebasic, stated policy death benefit (the face amount of the policy.) Thepolicy death benefit will remain equal to the Specified Amount untilsuch time as changes in cash value cause it to change. Withdrawals ofcash value or cash value growth may cause an increase or decrease in thedeath benefit. The Specified Amount appears on page three of a lifeinsurance policy. The Specified Amount formula uses boolean logicdesigned to assure compliance with the regulatory guidelines. It iscomputed as: ##EQU12## The system records which of the three casesdetermined SA.

# LOAN(n): This is the variable for new borrowings, in the beginning ofmonth n, as computed in FIG. 3B-5, Block 110. ##EQU13##

The system uses an alternative formula for policy loan interest ifpolicy loan interest is in advance rather than in arrears. This formulaassumes interest on policy loans is paid annually in arrears. ##EQU14##

This computation assumes mortgage interest is paid annually in arrears.The system uses a second formula if policy loan interest is paid inadvance.

# TOTLOAN(n): This value represents total borrowings, in the beginningof month n: ##EQU15## This value becomes non-zero for LOPT=1 or LOPT=2at n=MTH+1 and normally changes only annually.

# LOANBAL(n): This variable computes the loan balance, including accruedinterest, in the beginning of month n. This formula assumes interest ispaid in arrears. ##EQU16## # qx(n): This variable computes the monthlycost of insurance. ##EQU17## The variable qx(n) is independent of loanor mortgage value, and is computed for a prospective applicant for aproduct, and saved by the system. The system also allows for qx(n) to betable-driven instead of being computed as above from Qx. In this case,tables qx(a), as follows, are present instead of Qx.

qx(a): This is the monthly cost of insurance for a person of attainedage a. The system uses the same kind of multiple tables with selectionfactors, etc., that apply to Qx, including state-dependent unisexrequirements and tables. This permits carriers which have non-standardactuarial approaches to the conversion of annual mortality figures intomonthly figures to use the system. In this case:

    qx(n)= qx(a.sub.n)

The cash value computations in FIG. 3B-5, Block 110 are iterative. Thesystem starts with CV(0)=0. The cash value at the start of the contractis always equal to zero.

CVI(n): This is an intermediate value, calculated for the beginning ofmonth n:

    =CV(n-1)+LPAY(n)-LEXP(n)- LPCT(n)×LPAY(n)!

AAR(n): This variable computes the amount by which the carrier is atrisk in any month n. It is calculated as: ##EQU18##

COI(n): This variable computes the cost of insurance charge for a givenmonth n

    =qx(n)×APR(n)

The following variables are used for the computation of cash values andinterest rate breakpoints. These are calculated net of policy loans.Breakpoint formulas include:

NCV(n): This is the net pre-interest cash value, end of month n. It iscomputed as:

    =CVI(n)-COI(n)-LOANBAL(n)

NCV1(n): Part 1, up to the break:

    =min(NCV(n), iCbreak)

NCV2(n): Part 2, above the break:

    =max(0, NCV(n)-iCbreak)

INTC(n): This is the variable for interest credited in a given month n.It is computed as:

    =LOANBAL(n)×iL.sub.m +NCV1(n)×iC1.sub.m +NCV2(n)×iC2.sub.m

CV(n): This is the variable that computes the end of monthly lifeinsurance cash value. It is equal to:

    =CVI(n)-COI(n)+INTC(n)

MINS(n): This is the variable for the life insurance death benefit formonth n. It is the larger of the estimated guideline amount calculatedin SA, or the insurance corridor amount, multiplied by the Cash Value:

    =max{SA, CORR(a.sub.n)×CV(n)}

LSURR(n): This is the after-tax cash surrender value, at the end ofmonth n, which is the amount the policyholder would receive if he or shewere to surrender the contract and pay hiser tax obligation at the endof month n.

    =CV(n)-TAXRATE×max{0, CV(n)-LBASIS(n)}

LSNET(n): This is the net after-tax surrender value, at the end of monthn, assuming the policyholder surrenders the contract and pays off thepolicy loan and the tax liability at the end of month n.

    =LSURR(n)-LOANBAL(n)

The homeowner's surrender value includes the present value of the futureannuity payments plus LSURR(n) and LSNET(n) in those years when anannuity is present.

The system's first trial as to the premium amount needed to fund thepolicy is calculated using the 7LP formula. The system replaces Q(t)with Qx(a_(t)) for this computation; if only a value for qx(a_(t)) isavailable, the system uses 12×qx(a_(t)). The system sets inlp equal to(iC1+iC2)/2, and sums to LNUM instead of using 7 in the denominator.

For any solved policy in FIG. 3B-6, Block 130, the system must checkthat it conforms with regulatory limits on the size of premium for thepolicy cash value. The original gSP and gLP rates were approximations.The estimated guideline amounts are rates, expressed as dollars ofpremium divided by dollars of insurance, where the estimated GLP=gLP×SA,and the estimated GSP=gSP×SA. The system next finds the actual GLP andGSP for this policy in FIG. 3B-6, Block 128, both to report to thecarrier, and to check that the illustrated policy conforms to tax rulesgoverning insurance in FIG. 3B-6, Block 130. To do this, the systemreruns the insurance LIFPAY calculation, but with a change of certainparameters and tables, and with a new target.

In these re-illustrations:

The system saves the entire results of the preceding insurancecomputation in FIG. 3B-6, Block 128, since they may remain valid. Inparticular, the system lets SA_(r) =SA, LIFPAY_(r) =LIFPAY, each fromthe previously solved insurance run.

The system then uses qxg(a_(n)) tables instead of the tabulated orcomputed qx(n) values. The systems checks, however, the qx guaranteeflag for guideline premiums. If it is set, the system uses qx(n) insteadof qxg(a_(n)) in the first year. For COI(n), n=1 to 12, the guaranteedrate is assumed to be equal to the current rate, for those carriers thatguarantee the first year's interest crediting rate.

The system freezes SA in the GSP/GLP runs at SA_(r). It does not use theformula previously shown for the computation of SA. Therefore, thesystem skips the computations for Q(t), P(t), tP(t), gSP, gLP, 7LP, andSA in this iteration.

The target in each iteration is to find the value for LIFPAY thatachieves CV(12N_(max))=SA_(r). The cash value at the end of theinsurance policy must equal the Specified Amount the system justprojected and saved. None of the standard insurance targets apply.However, the system checks and reports if the projected cash value dropsbelow zero, CV(n)≦0, any n, throughout the projection.

The system does not compute loans in this iteration. LOAN, TOTLOAN andLOANBAL are equal to zero, for all n. The system also does not computeLBASIS(n), MINS(n), LSURR(n), or LSNET(n).

For The Actual Regulatory GSP: The system first assumes:

    LNUM=1, is a single premium, in the first month of the policy.

    iC1=iC2=max(insp, IRS.sub.-- insp)

where IRS₋₋ insp is a system parameter. Currently, this value is 6percent. The resulting LIFPAY computed by the system is the newGuideline Single Premium, GSP_(a).

For The Actual Regulatory GLP: The system assumes:

    LNUM=min(N.sub.max, 95-a.sub.1 +1)

    iC1=iC2=max(inlp, IRS.sub.-- inlp)

where IRS₋₋ inlp is a system parameter. This value is usually fourpercent for most carriers.

The resulting LIFPAY computed by the system is the new Guideline LevelPremium, GLP_(a).

Both GSP_(a) and GLP_(a), as finally computed, are reported to thecarrier as part of the insurance issuance process. They are also used toconfirm that the originally saved illustration values met theguidelines, as follows:

The system computes new guideline ratios, ##EQU19## and checks that theoriginal SA formula continues to be met. For example, using the originalLIFPAY_(r) and the new gLP and gSP, the system checks whether itcomputed the same SA_(r). Also, the system checks the cumulativepremiums each year:

    t×LIFPAY.sub.r ≦max(GSP.sub.a, t×GLP.sub.a), t=1 to LNUM.sub.r

where LNUM_(r) is the LNUM from the original illustration.

The technical tax rule that must be met is that the cumulative premiumspaid, as of year t, are less than or equal to max(GSP_(a), t×GLP_(a)).However, since the policies illustrated will initially require a fixedpremium per year, in order to comply with other regulatory requirementspreviously noted, the cumulative premium paid is quickly computed by thesystem. If the test is met when the last premium is paid, at LNUM_(r),it must be met thereafter. Thus, a simpler two part test suffices: (1)if LIFPAY_(r) ≦GLP_(a), the test is met. Otherwise, (2) if LNUM_(r)×LIFPAY_(r) ≦GSP_(a), the test is met.

If any of these three tests is not met in FIG. 3B-6, Block 130, thesystem uses the new gLP and gSP in place of the last in Block 132,whether from their approximation formulas or the last iteration, andre-solves the insurance computation originally saved, returning to FIG.3B-5, Block 110. Then the system repeats the GSP_(a) and GLP_(a)determination and test for the new SA_(r) resulting from there-illustration. The system repeats this computation as required. Oncethe tests are all met, the system saves the gLP_(a) and gSP_(a) values.

When it has completed the aforementioned regulatory guidelinecomputations, the system computes a projection of insurance cash valuesbased upon carrier guaranteed rates for the minimum credited interestand maximum mortality charges in Block 133. This projection isunrealistic and will look unattractive to the applicant. (See GuaranteedLife Insurance Values, Specimens 2-7.) However, by law it must bepresented to the prospective applicant. The cash value will in manyinstances drop to below zero before the end of the required period. Thesystem continues the computation, but the display shows the insurancelapsing in the first month the cash value is negative.

This projection therefore uses the LIFPAY and LNUM for the actualprojected insurance premium values, the qxg(a_(n)) table(s) in place ofqx(n) table/formula, and iC1=iC2=inlp. However, if the iC year-oneguarantee flag for this projection is set because the carrier guaranteesits first year rate, the system uses iC1 and iC2 for n=1 to 12. Theseare used to compute INTC(n). Similarly, if the qx year-one guaranteeflag for this projection is set because the carrier guarantees the firstyear mortality changes, the systems uses qx(n) instead of qxg(a_(n)),for n=1 to 12 for the first year.

The system also computes the required policy cost indices, see Block134, FIG. 3B-6, for each insurance product illustrated. These are theSurrender Cost Index At 5%, also called the Interest Adjusted Net CostIndex (IANC), and the Net Payment Cost Index At 5%. The formulas arenoted below: ##EQU20## where INVI is the investment interest rate, hereassumed to be 5%. The cash value term, CV(12t), is the illustrated cashvalue at the end of policy year t. The Surrender Cost Index is typicallycomputed for years 10 and 20 of the policy.

Similarly, the Net Payment Cost Index (NPI), Formula is identical toIANC(t) except that the cash value term CV(12t) is omitted, as shownbelow: ##EQU21##

If in FIG. 3B-7, Block 155, the prospective applicant wishes to see acomparison with a larger up-front payment than the Ryan Mortgagerequires, or if he or she wishes to see an equal up-front paymentcomparison for the sponsored case, the following describes how thesystem computes the additional up-front payment in the Ryan Mortgage.

The variables below are used by the system in this computation:

CLDP: This is the applicant-specified up-front payment amount which is:

    >DOWN1 (Unsponsored)

    >LIFPAY (Sponsored)

ADDEQ: This is a variable for additional equity achieved by applyingthat part of the up-front payment not going towards the premium toreducing the original amount borrowed:

    =CLDP-DOWN1 (Unsponsored)

    =CLDP-LIFPAY (Sponsored)

Then, the system reduces PRIN by ADDEQ, and solves for the new LIFPAYand, if unsponsored, the annuity for the new DOWN1. This gives a newADDEQ.

To bracket the final value and apply interpolation, rather than theasymptotic approach that simple iteration would achieve, the system usesa first try of PRIN₁ =PRIN₀ -CLDP. The system assumes all theprospective applicant's payment is used to reduce principal. Thus, thesystem has two end values:

    ADDEQ=0: ERR=CLDP-DOWN1.sub.0 (or, LIFPAY.sub.0)           (1)

    ADDEQ=CLDP: ERR=-DOWN1.sub.1 (or, -LIFPAY.sub.1)           (2)

where DOWN1₀ (or LIFPAY₀) are the original insurance values, and DOWN1₁or LIFPAY₁ are the values obtained by applying the entire CLDP to reducePRIN. Then the system interpolates to ERR=0, to obtain the next trialfor ADDEQ. As for the aforementioned insurance illustration iterations,quadratic interpolation is used to accelerate convergence.

Set out below are the formulas for computing the targets referred to inFIG. 3B-4, Block 104, and which are tested against in FIG. 3B-6, Block130.

The basic target that a universal life policy must meet is that thepremium must be adequate to provide a positive net cash value at alltimes.

    min.sub.n {CV(n)-LOANBAL(n)}>0, n=1 through 12N.sub.max

Whether or not there is a loan balance, of course, depends on which LOPTis in use. If there is none, the system test is min_(n) {CV(n)}>0, forall n.

For each of the LOPT values, this basic test is combined with others, asfollows:

LOPT=0:

(1) Basic test:

    min.sub.n {CV(n)}>0, n=1 through 12N.sub.max

(2) The guideline test for the ability of the cash surrender value torepay the mortgage is:

    LSURR(MTH)=PRIN

Where the test value is V=LSURR(MTH)-PRIN, where V=0.

If test (2) is not met, the system scales LIFPAY by the factor ##EQU22##If this does not bracket V=0, the system repeats the computation with adouble correction, ##EQU23## Once the value is bracketed, the systemapplies interpolation on V to find the correct LIFPAY.

LOPT=1:

(1) Basic test:

    min.sub.n {CV(n)}>0, n=1 through MTH

(2) The guideline test for the repayment of the mortgage:

    CV(n)≧LOANBAL(n), n=MTH+1, . . . , 12N.sub.max

The test value for this computation is: V=min_(n) {CV(n)-LOANBAL(n)}

If test (2) is not met, then the systems scales LIFPAY by the factor##EQU24## where n₀ is the month in which the minimum value of V wasreached. As before, the system uses double correction as needed tobracket V=0. The system checks for CV(n₀) going negative and, if itdoes, uses a much larger LIFPAY instead of using a computed factor.Then, the system interpolates.

The system then performs Check (1). If this condition is not met, thesystem proceeds per LOPT=0.

LOPT=2:

(1) The Basic test is the same as LOPT=1.

(2) There are two guideline tests. The first, V1, is the same as V forLOPT=1. The second is the sufficiency of the insurance death benefit to,eventually, pay off the mortgage and the borrowing against the policy'scash value, and is expressed as:

    MINS(n)≧LOANBAL(n)+PRIN, n=MTH+1, . . . , 12N.sub.max.

The test value is:

    V2=min.sub.n {MINS(n)-LOANBAL(n)-PRIN}.

The goal is to achieve V1=0 or V2=0, and the other ≧0.

If in FIG. 3B-5, Block 118, both V1 and V2 are less than zero, thesystem scales LIFPAY by the larger of: ##EQU25## and, as necessary, usesdouble correction to bracket V1 (or V2)=0.

If both V1 and V2 are greater than zero, the system scales LIFPAY by thesmaller of these two ratios. If one of V1 and V2 is less than zero, butnot the other, the system uses the ratio for that one which is less thanzero. The system once again uses double correction if necessary toachieve bracketing. If CV(n₀) is negative, or MINS(n₀) is negative, thesystem uses a much larger fixed factor times LIFPAY instead ofattempting to scale by a computed factor.

If the LIFPAY range that brackets V1=0 also yields V2≧0 at both ends,the system only needs to solve for the former. Otherwise the systeminterpolates with each, and uses the larger LIFPAY. Eventually, onedominates.

The system once again, tests (1). If it is not met, it proceeds perLOPT=0. In general, the month at which the auxiliary tests of LOPT=1 and2 yield the minimum V (or V1 and V2) should be at 12N_(max).

The selection of a life insurance product also selects the companionannuity if one is needed. Annuity parameters, tables, etc., therefore,are stored with the companion product as product parameters, tables,etc.

In FIG. B7, Block 146, the system computes the annuity from basicexpense, cost, and interest values, or uses a table-driven set ofpre-computed values provided by the carrier. The selected product datafile indicates which computational approach is used. The followingvariables are used to compute the annuity for a lump-sum premium paymentplan.

ATYPE: This is the annuity type flag. It indicates whether the annuitycomputation for that product is to be made by formula, or is to be tabledriven.

NUM: This is the variable for the number of annuity payments. This valueis equal to LNUM-1, one less than the number of insurance payments. Thesystem default is three.

ANNPAY: This is the variable for the annual annuity payment. This valueis equal to LIFPAY, the required life insurance (annual) premium.

APCTAX: This is the variable for the annuity initial tax charge,expressed as a percentage of annuity premium. Annuity taxes differ foreach state. This variable is independent of product.

iA: This is the annual annuity credited rate expressed as a percentage.It is the rate of interest earned by the funds invested in the annuity.This rate varies by product.

APCT: This is the annuity initial expense, expressed as a percentage ofannuity premium, for this product.

ASELEXP: This is the annuity selling expense. This is a fixed dollaramount and normally applies only in the first month of the first year.

AMNTEXP(n): This is the annuity maintenance expense. It is also a fixeddollar amount. Depending on the product, it may be an annual charge, inthe first month of each year, or a monthly charge. It may be constant orvariable, depending on the size of the annuity. A value may be presentfor (12×NUM)+1, i.e. in the month the last annuity payment is received.

AMTH: This is the variable for the number of months in the annuity. Itis computed as:

    =(12×NUM)+1

iA_(M) : This is the variable for the monthly annuity credited rate. Itis computed as:

    =(1+iA).sup.1/12 -1

APCTOT: This is the total percentage of annuity initial expense. Itreflects the carrier's charges and annuity taxes:

    =APCT+APCTAX

AEXP(n): This is the total carrier's fixed charges in the annuity formonth n. It is computed as:

    =ASELEXP+AMNTEXP(n), n=1

    -AMNTEXP(n), n=2, . . . , AMTH

DOWN1: This is the variable for the up-front payment amount. This is theamount the applicant pays, at the start, to: (1) pay the first year'sinsurance premium; and (2) buy the annuity that will pay the rest of thepremiums. It is computed as: ##EQU26##

DOWN1A: This is the variable for the annuity portion of the lump-sumprepayment. It is computed as: ##EQU27##

The applicant pays taxes on annuity interest earned received in theannual proceeds in the month the annuity payment is made. This is thebeginning of the first month, in each year, starting in the second year.For tax purposes, the total income of the annuity is shown as receivedby the applicant in equal annual payments.

ATAX(n): This is equal to the taxes payable on the annuity interestincome. It is computed as: ##EQU28##

Monthly Interest Rates: The system uses the interest rate, iA, in itsmonthly equivalent multiplier, (1+iA)^(1/12) -1=iA_(m)

ABASIS(n): This is the remaining basis in the annuity as of month n. Itis equal to: ##EQU29## where t=int (n-1)/12! is the number of wholeyears elapsed prior to month n, the number of payments made to date.

ABAL(n): This is the remaining annuity balance at the end of month n. Itis computed as:

    ABAL(0)=DOWN1A×(1-APCTOT)

    ABAL(1)= ABAL(0)-AEXP(1)!×(1+iA.sub.m)

    ABAL(n)= ABAL(n-1)-AEXP(t+1)-ANNPAY!×(1+iA.sub.m), n=12t+1, for t=1, 2, . . . , NUM-1

    ABAL(n)=ABAL(n-1)×(1+iA.sub.m), otherwise, n≦12×NUM

This reflects: (1) AEXP(t) is charged in the first month of year t, and;(2) ANNPAY is paid out in the first month of each year t, following year1.

ASURR(n): This is the after-tax surrender value, at the end of month n.Since this is the amount the policyholder's estate would receive in theevent of his or her death, it is also the annuity death benefit in monthn. Because the annuity is not insurance, the gain on the annuity istaxable.

    =ABAL(n)-TAXRATE×max{0, ABAL(n)-ABASIS(n)}

The following are inputs and parameters for table-driven annuitycomputations.

ARATE(NUM): This is the gross annuity conversion rate for table-drivenannuities. This number is stored exclusive of state tax, and isexpressed in terms of dollars of premium per dollar of annual payment,for an annuity with NUM annual payments.

DOWN1A: This is the annuity portion of the lump-sum prepayment for atable-driven annuity. It is computed as: ##EQU30##

DOWN1: This is the total down payment for a table-driven annuity. It iscomputed as:

    =DOWN1A+ANNPAY

ATAX(n), ABASIS(n): These are computed in the same way in a table-drivenannuity as in a computed annuity.

ABAL(n): This is the before-tax annuity surrender value, at the end ofmonth n. For a table-driven annuity, this is computed as:

    =(NUM-T.sub.n +1)×ANNPAY, 0<n≦12NUM

where T_(n) =int (n+11)/12!

ASURR(n): For a table-driven annuity, this is calculated in the samemanner as for a computed annuity, using the preceding ABAL(n).

The system includes two tables of mortgages to illustrate to theprospective applicant. One is for use in illustrating a conventionalmortgage shown in FIG. 3B-7, Block 150, and one is for a balloon paymentmortgage of the type made possible by this invention shown in FIG. 3B-7,Block 148. Selection from the system is based on whether a particularmortgage is available to the prospective applicant in the state in whichthe property is located and the mortgage duration. The system defaultfor comparisons is to select the conventional mortgage most closelymatching the Ryan Mortgage assumptions.

In order to provide a comparison of the economic benefits of the RyanMortgage, the system illustrates the conventional mortgage together withthe prospective applicant purchase of life insurance with death benefitequal to the outstanding mortgage balance. This is compared to the RyanMortgage. The term insurance cost is computed using the same mortalitycharges used for the universal life product to which it is beingcompared. To this end, certain additional parameters are added to eachproduct's description, for use in computing the conventional mortgage'slife insurance costs.

The system, with a lump-sum prepayment illustration comparison to aconventional mortgage, solves for a conventional mortgage with the samedown payment, in terms of initial cost, as the Ryan Mortgage. However,since sponsored plans allow for insurance premiums to be spread over alonger period with no annuity purchase, the initial Ryan Mortgageup-front payment may be lower than the five percent minimum down paymenta standard mortgage will permit. In that case, the system assumes theminimum down payment, five percent (or the minimum available on themarket), is to be paid, and the comparisons will show the lower up-frontpayment advantage of the Ryan Mortgage. Otherwise the comparison will bebased on like amounts.

Any Ryan Mortgage available in a particular location may be used withany insurance product available in that particular location. However, ifselecting the best combination, the system will default to insurance andmortgage products tied to the same index.

The system computes the various elements of the mortgage transaction inFIG. 3B-7 Blocks 148 and 150.

INITPAY: This is the variable for the conventional mortgage, from theinsurance illustration, for the amount to be used for the comparison ofthe up-front payment:

    =LIFPAY, sponsored Ryan Mortgage (no annuity)

    =DOWN1, not sponsored (annuity+LIFPAY)

PTS: This is the variable for mortgage points. It is expressed as apercentage of the mortgage principal. It is retrieved either as anaverage value from a database of closing costs (FIG. 3A-1, Block 78 orFIG. B2, Block 190) or if known, entered by the user in FIG. 3B-2, Block188. Mortgage principal, and therefore the cost of mortgage points, willdiffer between the Ryan and conventional mortgages. Some mortgage pointsare deductible as interest, while others are non-deductible fees. A flagis set if, for this mortgage, all or part of the PTS is deductibleinterest, rather than a non-deductible fee.

PMIPCT: This is the cost of private mortgage insurance. Because of itsenhanced security to lenders, this is not expected to be a cost with theRyan Mortgage. Conventional mortgages typically require private mortgageinsurance if the down payment amount is less than 20 percent of thepurchase price of the home. The system allows an input in FIG. 3B-2,Block 182, but the default is 0.5 percent of the original mortgagebalance annually until the mortgage balance goes below 80% of theoriginal purchase price of the home. The system uses zero for the RyanMortgage. However, other values may be used for both the Ryan Mortgageand the conventional mortgage.

dpins: This is the down payment expressed as a percentage of propertyvalue, below which PMI must be paid. The system allows an input in FIG.3B-2, Block 182, but the default is 20 percent. This is a systemparameter.

dpmin: This is the minimum down payment permissible for this mortgage,expressed as a percentage of PRIN, the mortgage principal amount. Thedefault minimum down payment is five percent. However, this may vary inthe case of VA or other federal or state agency endorsed mortgages.

TRATE: This is the variable for the term mortality rate. It is used toadjust the Qx table as it applies to the equivalent term insurance. Itvaries by life insurance product.

TEXP: This is the variable for the fixed expense charges, charged by thecarrier, for maintenance of the term insurance policy. This data isstored by product as a fixed dollar amount.

TLOAD: This is the variable for the term insurance load factor. It isexpressed as a percentage of premium for each product.

iM: This is the variable for the nominal annual mortgage interest rate.It is converted to a monthly rate when used for monthly payment amountsas, for example, in FIG. 3B-7, Block 148. The formula for the monthlyrate is: ##EQU31##

Because the Ryan Mortgage may be a variable mortgage, the system maycontain three values. The first is the fixed mortgage rate if one isoffered. The second is the increment to be added to the current indexrate in order to obtain the first year's rate, and the third, theincrement to be added in succeeding years. The current index rate (forexample the Treasury rate index) is a system parameter, maintained asrequired by the Ryan Mortgage operations management. Fixed rate valuesare stored by product. Most variable rate mortgages include a low ratefor the first year and a higher rate attached to an index in lateryears. In the equations for a variable rate mortgage, wherever iM_(m) isspecified, the system uses ##EQU32## for the value in month n.

NYR: This is the variable for the mortgage length in years, perinsurance parameters. It is equal to MTH/12.

Each mortgage chosen in the system is qualified by, or selected by,state and length of mortgage, NYR. The system may accommodate from 15 to40, in 5 year increments where 15, 20, 30 and 40 are the most commonchoice of lenders. The Ryan Mortgage table includes a ninety-nine yeartable entry which permits illustration of a mortgage for which theLOPT=1 and LOPT=2.

INITPAY is used to pay: (1) the actual up-front payment; (2) the initialpoints; and (3) the first year's PMI, if needed. Since the system cannotdetermine whether there is a PMI charge before it has computed theup-front payment, the system solves it both ways.

    INITPAY=DOWN+ PTS×MBAL(0)!+ PMIPCT×MBAL(0)!

where ##EQU33##

The system solves the above formula with PMIPCT=0, then, if dpmin<dpins,the system checks ##EQU34## If this condition is true, the system solvesfor INITPAY again with PMIPCT at its standard value, and uses thatresult.

Then, the system takes DOWN=max(DOWNX, dpmin×PRIN) and recomputesINITPAY, if DOWN does not equal DOWNX.

MPAY: This is the monthly payment in a conventional mortgage. Theconventional mortgage payment includes mortgage principal and interestas of the end of each month n. ##EQU35## For variable rate mortgages,iM_(m) is a function of the month number, and MPAY is recomputed eachyear, with MBAL(12t-12), t=1, 2, 3, . . . being the initial balanceinstead of MBAL(0), and MTH-12t+12 replacing MTH in the exponent, tocompute MPAY(12t+i-12), i=1 to 12. In the system illustration, threevalues are defined for iM. The year 1 guaranteed rate, the assumedvalue, based on the current Treasury bill rate, in years 2 and on, andthe maximum value required for truth in lending disclosure.

PRINRE(n): This is the reduction in mortgage principal during month n.

    =MPAY-INT(n)

    =MBAL(n-1)-MBAL(n)

INT(n): This is the interest paid at end of month n.

    =iM.sub.m ×MBAL(n-1)

    =MPAY-PRINRE(n)

so

    INT(n)=iM.sub.m ×MBAL(n-1)

MBAL(n): This is the variable for mortgage principal, after the paymentat end of month n.

    =MBAL(n-1)-PRINRE(n)

PMI_(t) : This is the annual PMI cost for year t. ##EQU36## PMI₁, is aprepaid item.

TERM_(t) : This is the annual term insurance premium for year t.##EQU37## where Qx_(t) (a_(t))=TRATE×Qx(a_(t))

MPTOT(n): This is the conventional loan monthly payment. It is computedas: ##EQU38## where t=int (n+23)/12!This shows the applicant prepaying,into escrow, next year's PMI premiums and paying annual term insurancepremiums.

TAXDED_(t) : This is the annual tax credit used by the system incomputing the mortgage after-tax cost. It is computed as: ##EQU39##

C. Discussion of Specimens

Specimens 1-7 provide samples of part of the output that would beprinted on the user's printer. Specimen 1 includes a sample ofexplanatory textual material that would be provided to introduceprospective applicants to the principal concepts involved in the use oflife insurance as collateral for mortgages. Specimens 2-7 provideexamples of the textual data which would be merged with illustrationdata in order to apprise prospective applicants of the potentialadvantages of using such a vehicle. Specimen 8 provides an example oftextual data than can be merged with client data to provide a completedinsurance application form. Specimen 9 provides an example of textualdata that can be merged with client data to provide a completed loanapplication form. In this embodiment of the invention, it iscontemplated that such textual data as is required by federal, state,and local regulations in the disclosure of loan, insurance, and otherinformation to potential purchasers/borrowers would be automaticallygenerated. This information might include data from insurers and theiragents as to minimum interest crediting rates and maximum cost ofinsurance charges, truth in lending disclosure information from lenders,information from employers or financial institutions regarding premiumpayment guarantees, and all other information necessary for legalcompliance, ethical business practice, and improved marketing throughthe provision of that information which may be most useful to theprospective applicant in financial planning and decision making.

D. Conclusion

In sum, the present invention involves a computer system used to supporta financial innovation in which a mortgage is combined with aninvestment as a means for repaying the mortgage. This investment maycollateralize the mortgage. Also, the investment may serve in place of adown payment for a conventional mortgage. The combination is tailored tomeet the U S legal requirements for offering such a combination, butwithout the drawbacks of a cost containment clause approach. There aremany variations on the theme of this invention, revolving primarilyaround variations in the kind of investment and variations in the kindof mortgage that are combined, and each variation can inherently impartcomputational and illustration requirements on the computer system. Allinvolve providing the consumer access to an investment specificallydesigned for use in repaying a mortgage. Preferably, this investment ismade available for purchases from multiple suppliers and is purchasedand owned by the borrower.

As to the investment, in one case, it can be placed in a tax-favoredaccount, such as an IRA, Keough, or 401K plan, but in another case, theinvestment can be held separately (i.e., in a manner that is nottax-favored).

In any of these cases, one alternative is for the investment to includea security or a security in combination with term life insurance. Thesecurity can be a zero coupon bond, such as a US Treasury Derivative ora municipal bond derivative, or the security can be a mutual fund.

Another alternative is for the investment to include an annuity. Theannuity can be either an immediate annuity or a deferred annuity. Eachcan be used with or without term life insurance to assure that themortgage is repaid upon the death of the borrower. The immediate annuitycan be used to pay interest on the mortgage, more particularly where themortgage is a home equity loan, and the term life insurance can be usedin repaying the home equity mortgage. The deferred annuity can be asingle premium, level premium, or variable premium annuity and may beused as a means for accumulating the necessary principal to repay themortgage.

Still another alternative is for the investment to include lifeinsurance. The life insurance can be term or permanent. For thepermanent life insurance, there can be one policy covering two insuredlives (e.g., borrower and co-borrower), and such a policy can be a jointpolicy (which pays on the first death) or a joint and survivor policy(which pays on the second death). The policy may also be a single policycovering a single life. Either way, the permanent life insurance can beuniversal life insurance or variable life insurance, or the permanentlife insurance can have at least one rider, such as a disability rideror an income rider.

For any of these cases and any of these alternatives, the mortgage canbe more particularly defined as including a first mortgage, a homeequity mortgage, a balloon repayment mortgage, a fixed interestmortgage, or a variable interest mortgage. As to the latter, thecomputer system can be programmed to compute a fixed payment, variableinterest rate mortgage having extra amortization of principal wheninterest rates are low, and negative amortization of the principal wheninterest rates are high. Such a mortgage may be used together withpermanent life insurance or a deferred annuity such that cash valueaccumulation from the investment is an offset to the negativeamortization.

While this invention has been particularly shown and described withreference to a preferred embodiment, it will be readily appreciated bythose of ordinary skill in the art that various changes andmodifications may be made without departing from the spirit or scope ofthe invention. For example, the particular formats of the variousdisplay screens or output herein described may be modified, as desired.Likewise, the present invention should not be limited to the specificexamples described herein since a greater or lesser number of optionsand functions for each of the menus and submenus that may be displayedon a CRT or VDT are within the scope of this invention. It is therefore,contemplated that the appended claims be interpreted as including theforegoing and other changes and modifications.

We claim:
 1. A machine for producing an illustration of collateralcompletely repaying an amount of a mortgage, the machine comprising:aprogrammed digital electrical computer operably connected to a terminalfor receiving manually entered information and for converting themanually entered information into electronic data conveyed to theprogrammed digital electrical computer and to a printer for receivingprocessed data generated by and conveyed from the programmed digitalelectrical computer to print the processed data, the programmed digitalelectrical computer being programmed to respond to the electronic datarepresenting the amount of the mortgage by computing an amount ofcollateral for repaying the amount of the mortgage and to electronicallygenerate an illustration as the processed data including the amount ofthe collateral owned by a borrower, used at least partially instead of adown payment, and completely repaying the amount of the mortgage.
 2. Themachine of claim 1, wherein the programmed digital electrical computeris programmed so that the amount of collateral is an initial amount ofpremium for a cash value life insurance policy having a death benefitsufficient for completely repaying the amount of the mortgage;andwherein the illustration includes the mortgage being rolled overuntil the death benefit repays the amount of the mortgage.
 3. Themachine of claim 2, wherein the programmed digital electrical computeris programmed to use bracketing and iteration to find the initial amountof premium for the life insurance policy.
 4. The machine of claim 3,wherein the programmed digital electrical computer is programmed tocompute an additional amount of premium sufficient to maintain cashvalue of the life insurance policy as projected in electronicallygenerating the illustration and in generating documentation of theadditional amount of premium.
 5. The machine of claim 1, wherein theprogrammed digital electrical computer is programmed so that the amountof collateral is an initial amount of premium for a cash value lifeinsurance policy sufficient for repaying the amount of the mortgage withafter-US-tax proceeds from a surrender of the life insurance policy;andwherein the programmed digital electrical computer is programmed sothat the illustration includes the proceeds repaying the amount of themortgage.
 6. The machine of claim 5, wherein the programmed digitalelectrical computer is programmed to use bracketing and iteration tofind the initial amount of premium for the life insurance policy.
 7. Themachine of claim 6, wherein the programmed digital electrical computeris programmed to use compute an additional amount of premium sufficientto maintain cash value of the life insurance policy as projected inelectronically generating the illustration and in generatingdocumentation of the additional amount of premium.
 8. The machine ofclaim 1, wherein the programmed digital electrical computer isprogrammed so that the amount of collateral is an initial amount ofpremium for a cash value life insurance policy sufficient for repayingthe amount of the mortgage with a loan from the life insurance policy,the life insurance policy for use in conjunction with an investment formaintaining the life insurance policy until the borrower's death;andwherein the illustration includes the loan from the life insurancepolicy repaying the amount of the mortgage.
 9. The machine of claim 8,wherein the programmed digital electrical computer is programmed so thatthe loan has a spread between a loaned funds credited rate of the lifeinsurance policy and a policy loan rate of the life insurance policy,the spread being less than 300 basis points.
 10. The machine of claim 8,wherein the programmed digital electrical computer is programmed to usebracketing and iteration to find the initial amount of premium for thelife insurance policy.
 11. The machine of claim 10, wherein theprogrammed digital electrical computer is programmed to compute anadditional amount of premium sufficient to maintain cash value of thelife insurance policy as projected in the illustration and forgenerating documentation of the additional amount of premium.
 12. Themachine of claim 1, wherein the programmed digital electrical computeris programmed so that the amount of collateral is an initial amount ofpremium for a cash value life insurance policy sufficient to repay theamount of the mortgage by using loans from the life insurance policy topay interest on the amount of the mortgage and a death benefit of thelife insurance policy sufficient to repay principal on the amount of themortgage, the life insurance policy for use in conjunction withinvestment for maintaining the life insurance policy until theborrower's death; andwherein the illustration includes repaying themortgage principal with the death benefit.
 13. The machine of claim 12,wherein the programmed digital electrical computer is programmed so thatthe loans each have a spread between a loaned funds credited rate of thelife insurance policy and a policy loan rate of the insurance policy,the spread being less than 300 basis points.
 14. The machine of claim12, wherein the programmed digital electrical computer is programmed touse bracketing and iteration to find the initial amount of premium forthe life insurance policy.
 15. A method for making a machine operable toproduce an illustration of an investment repaying an amount of a USmortgage, the method comprising the steps of:programming a digitalelectrical computer to make a digital electrical computer programmed toreceive an amount of a mortgage, the mortgage being a US mortgage and togenerate, in response to receipt of the amount of the mortgage, anillustration including an investment repaying the amount of themortgage; and wherein the step of programming is does not includeprogramming the digital electrical computer to electronically generatethe illustration as including a mortgage plan having a cost containmentclause.
 16. The method of claim 15, wherein the investment includes alife insurance policy and wherein the step of programming includesprogramming the digital electrical computer to compute a SpecifiedAmount of the life insurance policy sufficient to completely repay theamount of the mortgage.
 17. The method of claim 15, wherein theinvestment includes a cash value life insurance policy, and wherein thestep of programming includes programming the digital electrical computerto compute DOWN1, representing an up-front payment amount for collateralfor the amount of the mortgage, as ##EQU40## wherein ANNPAY representsan annual amount paid by an annuity, the amount paid being equal toLIFPAY, representing an annual premium for the life insurance policy,and whereinNUM represents a number of payments made by the annuity, iArepresents an annual credited rate of the annuity expressed as apercentage, iA_(M) represents a monthly credited rate of the annuity,APCTOT represents a total percentage of initial expense for purchasingthe annuity, AMTH represents 12×NUM, and AEXP(n), represents a carrier'stotal fixed charge taken from a cash balance of the annuity in month n.18. The method of claim 15, wherein the investment includes a lifeinsurance policy and wherein the step of programming the digitalelectrical computer includes programming the digital electrical computercomputer to electronically generate the illustration as including anamount representing an annual premium for the life insurance policywhich would at least partially replace a down payment for a conventionalUS mortgage.
 19. The method of claim 15, wherein the step of programmingthe digital electrical computer includes programming the digitalelectrical computer to estimate LIFPAY, representing an amount of annualpremium for a life insurance policy as the investment, given LNUM,representing a number of annual insurance premiums, in testing whetherLSURR(MTH)=PRIN, wherein LSURR(MTH) represents an after-US-tax cashsurrender value of the life insurance policy, MTH represents the lastmonth of the mortgage, and PRIN represents a sum borrowed.
 20. Themethod of claim 15, wherein the step of programming the digitalelectrical computer includes programming the digital electrical computerto bracket and use iteration to find a premium amount for a lifeinsurance policy as the investment.
 21. The method of claim 15, whereinthe investment includes a cash value life insurance policy, and whereinthe step of programming the digital electrical computer includesprogramming the digital electrical computer to find an initial premiumamount, and project a cash value for, the life insurance policy;andwherein the step of programming the digital electrical computerincludes programming the digital electrical computer to compute anadditional amount of premium sufficient to maintain the cash value asprojected in the illustration, and to electronically generatedocumentation of the amount of additional premium.
 22. The method ofclaim 15, wherein the step of programming the digital electricalcomputer includes programming the digital electrical computer for use bya plurality of users and to assess a level of user authority to accessinformation stored in a database accessible to the digital electricalcomputer.
 23. The method of claim 22, wherein the step of programmingthe digital electrical computer includes programming the digitalelectrical computer to link to one of a plurality of digital electricalcomputers of respective lenders via respective open-end network gatewaysand to obtain electronic data representing mortgage information forcustomizing the illustration in response to a selection of a mortgageoffered by one of the lenders.
 24. The method of claim 23, wherein thestep of programming the digital electrical computer includes programmingthe digital electrical computer to link to one of a plurality of digitalelectrical computers of respective securities brokers via respectiveopen-end network gateways and to obtain security information forcustomizing the illustration in response to a selection of a securityoffered by one of the securities brokers.
 25. The method of claim 23,wherein the step of programming the digital electrical computer includesprogramming the digital electrical computer to link to one of aplurality of digital electrical computers of respective life insurancecarriers via respective open-end network gateways and to obtaininsurance information for customizing the illustration in response to aselection of a life insurance policy offered by one of the carriers asthe investment.
 26. The method of any one of claims 23, 24 or 25,wherein the step of programming the digital electrical computer includesprogramming the digital electrical computer to convey electronic mail toand from each of the digital electrical computers.
 27. The method ofclaim 26, wherein the step of programming the digital electricalcomputer includes programming the digital electrical computer to offerhypertext-linked help at each one of the digital electrical computers.28. A machine for producing an illustration of an amount of aninvestment repaying an amount of a mortgage, the machine comprising:adigital electrical computer programmed to receive an amount of amortgage and to electronically generate, in response to receipt of theamount of the mortgage, an illustration including an amount of aninvestment repaying the amount of the mortgage; and wherein theprogrammed digital electrical computer is not programmed to generate theillustration as including a mortgage plan having a cost containmentclause.
 29. The machine of claim 28, wherein the programmed digitalelectrical computer is programmed to electronically generate theillustration including the amount of the investment owned by a borrower.30. The machine of claim 28, wherein the programmed digital electricalcomputer is programmed to electronically generate the illustrationwherein the investment is in a US-tax-favored investment plan.
 31. Themachine of claim 30, wherein the investment plan is an individualretirement account investment plan.
 32. The machine of claim 30, whereinthe investment plan is a Keough investment plan.
 33. The machine ofclaim 30, wherein the investment plan is a 401K plan.
 34. The machine ofclaim 30, wherein the investment plan is a profit sharing plan.
 35. Themachine of claim 28, wherein the programmed digital electrical computeris programmed to electronically generate the illustration wherein theinvestment is not in a US-tax-favored investment plan.
 36. The machineof any one of claims 28-35, wherein the investment includes a security.37. The machine of any one of claims 28-35, wherein the investmentincludes a life insurance policy.
 38. The machine of any one of claims28-35, wherein the investment includes an annuity.
 39. The machine ofclaim 28, wherein the programmed digital electrical computer isprogrammed to electronically generate data for a Truth in Lendingdisclosure.
 40. The machine of claim 39, wherein the programmed digitalelectrical computer is programmed to update the illustration stored in adatabase accessible to the programmed digital electrical computer. 41.The machine of claim 40, wherein the programmed digital electricalcomputer is programmed to electronically generate the amount of theinvestment being sufficient to completely repay the amount of themortgage.
 42. The machine of claim 41, wherein the programmed digitalelectrical computer is programmed to convey electronic mail to and fromeach of a plurality of digital electrical computers operably connectedto the programmed digital electrical computer.
 43. The machine of claim42, wherein the programmed digital electrical computer is programmed tooffer computerized help at each one of the digital electrical computers.44. The machine of claim 39, wherein the programmed digital electricalcomputer is programmed to link to one of a plurality of digitalelectrical computers of respective life insurance carriers viarespective open-end network gateways and to obtain insurance informationto customize the illustration in response to a selection of a lifeinsurance policy of one of the carriers as the investment.
 45. Themachine of claim 44, wherein the programmed digital electrical computeris programmed to link to one of a plurality of digital electricalcomputers of respective lenders via respective open-end network gatewaysand to obtain mortgage information to customize the illustration inresponse to a selection of a mortgage of one of the lenders.
 46. Themachine of claim 39, wherein the programmed digital electrical computeris programmed to link to one of a plurality of digital electricalcomputers of respective securities brokers via respective open-endnetwork gateways and to obtain security information to customize theillustration in response to a selection of a security offered by one ofthe securities brokers as the investment.
 47. The machine of claim 39,wherein the programmed digital electrical computer is programmed toreceive selection criteria for the investment and, in response toreceipt of the criteria, to find the best investment from investmentsoffered respectively by a plurality of providers.
 48. The machine ofclaim 39, wherein the programmed digital electrical computer isprogrammed to receive selection criteria for the mortgage and, inresponse to receipt of the criteria, to find the best of a plurality ofmortgages offered respectively by a plurality of lenders.
 49. Themachine of claim 39, wherein the programmed digital electrical computeris programmed to receive selection criteria for a life insurance policyas the investment, and in response to receipt of the criteria, to findthe best life insurance policy from a plurality of life insurancepolicies offered respectively by a plurality of carriers.
 50. Themachine of claim 28, wherein the investment is a cash value lifeinsurance policy; andwherein the programmed digital electrical computeris programmed to compute an amount of an additional premium for the lifeinsurance policy payable upon a shortfall in cash value of the lifeinsurance policy.
 51. The machine of claim 50, wherein the programmeddigital electrical computer is programmed to electronically generate theillustration including a premium structure of the life insurance policycomputed in response to a lump-sum prepayment designation.
 52. Themachine of claim 51, wherein the programmed digital electrical computeris programmed to electronically generate the illustration including theamount of the mortgage being repaid by after-US-tax proceeds from asurrender of the life insurance policy.
 53. The machine of claim 51,wherein the programmed digital electrical computer is programmed toelectronically generate the illustration including the amount of themortgage being repaid by a loan from the life insurance policy.
 54. Themachine of claim 51, wherein the programmed digital electrical computeris programmed to electronically generate the illustration including theamount of the mortgage being repaid by a death benefit of the lifeinsurance policy after a roll over of the mortgage.
 55. The machine ofclaim 50, wherein the programmed digital electrical computer isprogrammed to electronically generate the illustration including apremium structure of the life insurance policy computed in response to acorporate guarantee designation.
 56. The machine of claim 55, whereinthe programmed digital electrical computer is programmed toelectronically generate the illustration including the amount of themortgage being repaid by after-US-tax proceeds from a surrender of thelife insurance policy.
 57. The machine of claim 55, wherein theprogrammed digital electrical computer is programmed to electronicallygenerate the illustration including the amount of the mortgage beingrepaid by at least one loan from the life insurance policy.
 58. Themachine of claim 55, wherein the programmed digital electrical computeris programmed to electronically generate the illustration including theamount of the mortgage being repaid by a death benefit of the lifeinsurance policy after a roll over of the mortgage.
 59. The machine ofclaim 50, wherein the programmed digital electrical computer isprogrammed to electronically generate the illustration including apremium structure of the life insurance policy computed in response toan irrevocable letter of credit designation.
 60. The machine of claim59, wherein the programmed digital electrical computer is programmed toelectronically generate the illustration including the amount of themortgage being repaid by after-US-tax proceeds from a surrender of thelife insurance policy.
 61. The machine of claim 59, wherein theprogrammed digital electrical computer is programmed to electronicallygenerate the illustration including the amount of the mortgage beingrepaid by at least one loan from the life insurance policy.
 62. Themachine of claim 59, wherein the programmed digital electrical computeris programmed to electronically generate the illustration including theamount of the mortgage being repaid by a death benefit of the lifeinsurance policy after a roll over of the amount of the mortgage. 63.The machine of claim 28, wherein the programmed digital electricalcomputer is programmed to electronically generate the illustrationincluding an amount of the investment for use as collateral for themortgage.
 64. The machine of claim 63, wherein the investment includes acash value life insurance policy having an initial premium amount and aprojected cash value; andwherein the programmed digital electricalcomputer is programmed to compute an additional amount of premiumsufficient to maintain the cash value of the life insurance policy asprojected in the illustration and to electronically generatedocumentation of the additional amount of premium.
 65. The machine ofclaim 64, wherein the programmed digital electrical computer isprogrammed for outputting loan/insurance product information at anoutput device operably connected to the programmed digital electricalcomputer.
 66. The machine of claim 64, wherein the programmed digitalelectrical computer is programmed for outputting loan rate informationat an output device operably connected to the programmed digitalelectrical computer.
 67. The machine of claim 64, wherein the programmeddigital electrical computer is programmed for outputting insurancepremium information at an output device operably connected to theprogrammed digital electrical computer.
 68. The machine of claim 64,wherein the programmed digital electrical computer is programmed forgenerating the illustration as a generic illustration including themortgage using the cash value of the life insurance policy as thecollateral for a standard amount as the amount of the mortgage.
 69. Themachine of claim 68, wherein the programmed digital electrical computeris programmed to obtain, in generating the generic illustration, datarepresenting average loan rates and average closing costs.
 70. Themachine of claim 69, wherein the programmed digital electrical computeris programmed for adjusting any of the data to reflect an input value.71. The machine of claim 63, wherein the programmed digital electricalcomputer is programmed to compute and generate a reillustration, at atime during the mortgage, to reflect a changed investment amount. 72.The machine of claim 28, wherein the programmed digital electricalcomputer is programmed to compute and generate a reillustration, at atime during the mortgage, to reflect a changed mortgage payment amount.73. The machine of claim 28, wherein the investment includes a lifeinsurance policy; andwherein the programmed digital electrical computeris programmed to compute an interest rate for the mortgage and acredited rate for the life insurance policy, wherein the rates arecomputed from one interest rate index.
 74. The machine of claim 73,wherein the programmed digital electrical computer is programmed tocompute the interest rate index.
 75. The machine of claim 64, whereinthe programmed digital electrical computer is programmed to receivemortgage application information from the terminal and to electronicallygenerate a customized mortgage application form for the mortgage inresponse to receipt of the mortgage application information and todirect the printer to print the customized mortgage application form.76. The machine of claim 64, wherein the programmed digital electricalcomputer is programmed to receive borrower health information forinsurance underwriting.
 77. The machine of claim 64, wherein theprogrammed digital electrical computer is programmed to receive lifeinsurance policy application information and to a customized lifeinsurance application form for the life insurance policy in response toreceipt of the insurance application information and to direct theprinter to print the customized mortgage application form.
 78. Themachine of claim 28, wherein the programmed digital electrical computeris programmed to receive brokerage account information and to customizedbrokerage account application form in response to receipt of thebrokerage account application information and to direct the printer toprint the customized mortgage application form.
 79. The machine of claim28, wherein the programmed digital electrical computer is programmed tocompute an amount of the amount of the investment in response to adesignation of a higher up-front payment than an amount of premium for alife insurance policy as the investment, the designation being input atthe terminal, and the amount of premium being solved for by iterativemeans; andwherein the programmed digital electrical computer is alsoprogrammed to compute in response to receipt of the designation, anallocation of monies to a down payment and to the amount of premium. 80.The machine of claim 28, wherein the programmed digital electricalcomputer is programmed to electronically generate the illustrationincluding a comparison of the mortgage and a conventional mortgage. 81.The machine of claim 28, wherein the programmed digital electricalcomputer is programmed to be responsive to an input guarantordesignation.
 82. A machine for producing an illustration of an amount ofa security repaying an amount of a mortgage, the machine comprising:adigital electrical computer programmed to receive an amount of amortgage and to electronically generate, in response to receipt of theamount of the mortgage, an illustration including an amount of asecurity repaying the amount of the mortgage; and wherein the programmeddigital electrical computer is not programmed to generate theillustration as including a mortgage plan having a cost containmentclause.
 83. The machine of claim 82, wherein the programmed digitalelectrical computer is programmed to electronically generate theillustration including the amount of the security used in conjunctionwith an amount of a term life insurance policy for repaying the amountof the mortgage.
 84. The machine of claim 82, wherein the security is azero coupon bond.
 85. The machine of claim 84, wherein the zero couponbond is a US Treasury derivative.
 86. The machine of claim 84, whereinthe zero coupon bond is a municipal bond derivative.
 87. The machine ofclaim 82, wherein the security is at least one share in a mutual fund.88. The machine of claim 82, wherein the security is a variable annuity.89. A machine for producing an illustration of a life insurance policyrepaying an amount of a mortgage, the machine comprising:a digitalelectrical computer programmed to receive an amount of a mortgage and toelectronically generate, in response to receipt of the amount of themortgage, an illustration including an amount of a life insurance policyfor repaying the amount of the mortgage; and wherein the programmeddigital electrical computer is not programmed to generate theillustration as including a mortgage plan having a cost containmentclause.
 90. The machine of claim 89, wherein the life insurance policyis a term life insurance policy.
 91. The machine of claim 89, whereinthe life insurance policy is a permanent life insurance policy.
 92. Themachine of claim 91, wherein the life insurance policy is a universallife insurance policy.
 93. The machine of claim 91, wherein the lifeinsurance policy is a single policy providing a death benefit for twoinsureds, at least one of the insureds being a borrower under themortgage.
 94. The machine of claim 93, wherein the life insurance policyis a joint life insurance policy.
 95. The machine of claim 93, whereinthe life insurance policy is a joint and survivor life insurance policy.96. The machine of claim 91, wherein the programmed digital electricalcomputer is programmed so that the illustration includes the amount ofthe life insurance policy for the borrower and a second amount of a lifeinsurance policy for a second insured, such that combined death benefitsof the life insurance policies are sufficient to repay the amount of themortgage and such that combined cash values of the life insurancepolicies are sufficient to repay the amount of the mortgage.
 97. Themachine of claim 91, wherein the life insurance policy is a variablelife insurance policy.
 98. The machine of any one of claims 90 or 91,wherein the life insurance policy has at least one rider.
 99. Themachine of any one of claims 90 or 91, wherein the life insurance policyhas a disability rider.
 100. The machine of any one of claims 90 or 91,wherein the life insurance policy has an income rider.
 101. The machineof claim 91, wherein the programmed digital electrical computer isprogrammed to iteratively solve for a premium amount for the lifeinsurance policy.
 102. The machine of claim 101, wherein the programmeddigital electrical computer is programmed to compute a Specified Amountof the life insurance policy sufficient for repaying the amount of themortgage; andwherein the programmed digital electrical computer isprogrammed so that the illustration includes the Specified Amount. 103.The machine of claim 102, wherein the programmed digital electricalcomputer is programmed to test the Specified Amount against an InternalRevenue Service Code definition of life insurance.
 104. The machine ofclaim 103, wherein the programmed digital electrical computer isprogrammed to test the Specified Amount against an amount computed byusing a Guideline Level Premium.
 105. The machine of claim 103, whereinthe programmed digital electrical computer is programmed to test theSpecified Amount against an amount computed by using a Guideline SevenPay Premium.
 106. The machine of claim 103, wherein the programmeddigital electrical computer is programmed to test the Specified Amountagainst an amount computed using a Guideline Single Premium.
 107. Themachine of claim 102, wherein the programmed digital electrical computeris programmed to compute the Specified Amount as not less than PRIN,representing the amount of the mortgage.
 108. The machine of claim 91,wherein the programmed digital electrical computer is programmed tocompute MINS(n), representing an amount of death benefit for month n,the death benefit in compliance with an Internal Revenue Service Coderatio of insurance cash value to death benefit.
 109. The machine ofclaim 91, wherein the programmed digital electrical computer isprogrammed to compute LSURR(MTH), representing an after-US-tax cashsurrender value of the life insurance policy, as not less than PRIN,representing the amount of the mortgage, at MTH, representing the lastmonth of the mortgage.
 110. The machine of claim 91, wherein theprogrammed digital electrical computer is programmed to compute CV(n),representing end of month life insurance policy cash value for month n,and LOAN(n), representing an amount of a loan from the life insurancepolicy in the beginning of month n.
 111. The machine of claim 91,wherein the programmed digital electrical computer is programmed tocompute LOAN(MTH) equal to PRIN, wherein LOAN(MTH) represents a lifeinsurance policy loan in the beginning of month MTH, MTH representingthe last month of the mortgage, and PRIN represents the amount of themortgage.
 112. The machine of claim 91, wherein the programmed digitalelectrical computer is programmed to compute CV(n), representing end ofmonth life insurance cash value for month n, and TOTLOAN(n),representing total policy loan borrowings in the beginning of month n,such that an amount CV(n)-TOTLOAN(n) is always greater than zero througheach year of the illustration.
 113. The machine of claim 91, wherein theprogrammed digital electrical computer is programmed to compute MINS(n),representing an amount of death benefit of the life insurance policy,which in all years in the mortgage is not less than the total of PRIN,representing the amount of the mortgage, and LOANBAL(n), representing aloan balance of the life insurance policy, including accrued interest,in the beginning of month n.
 114. The machine of claim 91, wherein theprogrammed digital electrical computer is programmed to compute LOAN(n),representing an amount of a life insurance policy loan in the beginningof a month n, equal to PRIN×iM, wherein PRIN represents the amount ofthe mortgage, and iM represents an annual interest rate charged for theamount of the mortgage.
 115. The machine of claim 91, wherein theprogrammed digital electrical computer is programmed to compute INTC(n),representing an amount of life insurance policy interest credited, asincluding LOANBAL(n)×iL_(m), wherein iL_(m) represents a monthly rate ofinterest and LOANBAL(n) represents a loan balance of the life insurancepolicy, including accrued interest, in the beginning of month 14 n. 116.The machine of claim 91, wherein the programmed digital electricalcomputer is programmed to compute LPAY(n), representing an amount ofpremium for month n for the life insurance policy.
 117. The machine ofclaim 91, wherein the programmed digital electrical computer isprogrammed to compute LPAY(n), representing an amount of premium formonth n for the life insurance policy such that the life insurancepolicy illustrated is not treated as a modified endowment contract forUS tax purposes.
 118. The machine of claim 91, wherein the programmeddigital electrical computer is programmed to compute a value forLPAY(n), representing an amount of premium for month n for the lifeinsurance policy, and wherein the programmed digital electrical computeris programmed so that the illustration includes the value as at leastpartially replacing a down payment for a mortgage.
 119. The machine ofclaim 118, wherein the programmed digital electrical computer isprogrammed so that a value for ANNPAY, equalling LPAY(1), is used tocompute an amount DOWN1, representing an amount of an up-front paymentwhich includes LPAY(1), representing a first premium payment combinedwith DOWN1A, representing an amount for purchasing an annuity sufficientto pay scheduled premiums for the life insurance policy for NUM years,NUM representing a specified number of years.
 120. The machine of claim118, wherein the programmed digital electrical computer is programmed tocompute DOWN1, representing an up-front payment for collateral for theamount of the mortgage, as ##EQU41## wherein ANNPAY represents an annualamount paid by an annuity, the amount paid being equal to LPAY,representing an annual life insurance premium, and wherein NUMrepresents a number of payments made by the annuity, iA represents anannual credited rate of the annuity expressed as a percentage, iA_(M)represents a monthly credited rate of the annuity, APCTOT represents atotal percentage of initial expense for purchasing the annuity, AMTHrepresents 12×NUM, and AEXP(n), represents a carrier's total fixedcharges taken from a cash balance of the annuity in month n.
 121. Amachine for producing an illustration of an amount of an annuityrepaying an amount of a mortgage, the machine comprising:a programmeddigital electrical computer operably connected to communicateelectronically with a terminal and a printer, the electrical digitalcomputer being programmed to receive an amount of a mortgage from theterminal, to electronically generate, in response to receipt of theamount of the mortgage, an illustration including an amount of anannuity repaying the amount of the mortgage, and to print theillustration at the printer; and wherein the programmed digitalelectrical computer is not programmed to generate the illustration asincluding a mortgage plan having a cost containment clause.
 122. Themachine of claim 121, wherein the programmed digital electrical computeris programmed to compute the amount of the annuity for an immediateannuity.
 123. The machine of claim 121, wherein the programmed digitalelectrical computer is programmed to compute the amount of the annuityfor an immediate annuity used in conjunction with an amount of a termlife insurance policy for repaying the amount of the mortgage.
 124. Themachine of claim 121, wherein the programmed digital electrical computeris programmed to compute the amount of the annuity for an immediateannuity for paying interest on the amount of the mortgage.
 125. Themachine of claim 121, wherein the programmed digital electrical computeris programmed to compute the amount of the annuity for an immediateannuity; andwherein the amount of the mortgage includes an amount of ahome equity mortgage.
 126. The machine of claim 121, wherein theprogrammed digital electrical computer is programmed to compute theamount of the annuity for an immediate annuity used in conjunction withan amount of a term life insurance policy for repaying the amount of themortgage, and wherein the amount of the mortgage includes an amount of ahome equity mortgage.
 127. The machine of claim 121, wherein theprogrammed digital electrical computer is programmed to compute theamount of the annuity for a deferred annuity.
 128. The machine of claim121, wherein the programmed digital electrical computer is programmed tocompute the amount of the annuity for a deferred annuity used inconjunction with an amount of a term life insurance policy for repayingthe amount of the mortgage.
 129. The machine of claim 127, wherein theprogrammed digital electrical computer is programmed to compute theamount of the annuity for a single premium deferred annuity.
 130. Themachine of claim 127, wherein the programmed digital electrical computeris programmed to compute the amount of the annuity for a level premiumdeferred annuity.
 131. The machine of claim 127, wherein the programmeddigital electrical computer is programmed to compute the amount of theannuity for a variable premium deferred annuity.
 132. The machine of anyone of claims 28, 82, 89, or 121, wherein the amount of the mortgage isan amount of a first mortgage.
 133. The machine of any one of claims 28,82, 89, or 121, wherein the amount of the mortgage includes an amount ofa home equity mortgage.
 134. The machine of any one of claims 28, 82,89, or 121, wherein the amount of the mortgage is an amount of a balloonpayment mortgage.
 135. The machine of any one of claims 28, 82, 89, or121, wherein the amount of the mortgage is an amount of a fixed interestmortgage.
 136. The machine of any one of claims 28, 82, 89, or 121,wherein the amount of the mortgage is an amount of a variable interestmortgage.
 137. The machine of claim 28, wherein the programmed digitalelectrical computer is programmed to compute amortization of the amountof the mortgage when interest rates of the mortgage are low, andnegative amortization of the mortgage when interest rates of themortgage are high, such that earnings on the investment are an offset tothe negative amortization.
 138. A method for using a machine toelectronically produce an illustration of an amount of an investmentrepaying an amount of a mortgage, the method comprising the stepof:programming a digital electrical computer operably connected to aterminal for receiving manually input information and for converting themanually input information into input data electronically conveyed tothe programmed digital electrical computer to process the input datainto output data and operably connected to a printer for printing theoutput data, the digital electrical computer being programmed tocompute, in response to an amount of a mortgage as a portion of theinput information, an amount of an investment sufficient for repayingthe amount of the mortgage and at least partially collateralizing theamount of the mortgage, and to generate an illustration, including theinvestment repaying the amount of the mortgage, as a portion of theoutput information.
 139. The method of claim 138, wherein the step ofprogramming includes programming the digital electrical computer toelectronically generate the illustration including an amount of theinvestment which would at least partially be used instead of a downpayment for a conventional mortgage.
 140. The method of claim 138,wherein the step of programming includes programming the digitalelectrical computer to electronically generate the illustration with theinvestment selected from a plurality of investments offered respectivelyby a plurality of providers.
 141. The method of claim 138, wherein thestep of programming includes programming the digital electrical computerto receive mortgage selection criteria and, in response to receipt ofthe criteria, to find the best mortgage of a plurality of mortgages.142. The method of claim 138, wherein the investment is a cash valuelife insurance policy, and wherein the step of programming includesprogramming the digital electrical computer to receive selectioncriteria for the life insurance policy at the terminal, and in responseto receipt of the criteria, to find the best life insurance policy of aplurality of life insurance policies.
 143. The method of claim 138,wherein the investment is a cash value life insurance policy, andwherein the step of programming includes programming the digitalelectrical computer to electronically generate the illustrationincluding a premium structure of the life insurance policy computed inresponse to a lump-sum prepayment designation.
 144. The method of claim143, wherein the step of programming includes programming the digitalelectrical computer to electronically generate the illustrationincluding the amount of the mortgage being repaid by after-US-taxproceeds from a surrender of the life insurance policy.
 145. The methodof claim 143, wherein the step of programming includes programming thedigital electrical computer to electronically generate the illustrationincluding the amount of the mortgage being repaid by at least one loanfrom the life insurance policy.
 146. The method of claim 143, whereinthe step of programming includes programming the digital electricalcomputer to electronically generate the illustration including theamount of the mortgage being repaid by a death benefit of the lifeinsurance policy after a roll over of the mortgage.
 147. The method ofclaim 138, wherein the investment is a cash value life insurance policyand wherein the step of programming includes programming the digitalelectrical computer to electronically generate the illustrationincluding a premium structure of the life insurance policy computed inresponse to a corporate guarantee designation.
 148. The method of claim147, wherein the step of programming includes programming the digitalelectrical computer to electronically generate the illustrationincluding the amount of the mortgage being repaid by after-US-taxproceeds from a surrender of the life insurance policy.
 149. The methodof claim 147, wherein the step of programming includes programming thedigital electrical computer to electronically generate the illustrationincluding the amount of the mortgage being repaid by at least one loanfrom the life insurance policy.
 150. The method of claim 147, whereinthe step of programming includes programming the digital electricalcomputer to electronically generate the illustration including theamount of the mortgage being repaid by a death benefit of the lifeinsurance policy after a roll over of the mortgage.
 151. The method ofclaim 138, wherein the investment is a cash value life insurance policyand wherein the step of programming includes programming the digitalelectrical computer to electronically generate the illustrationincluding a premium structure of the life insurance policy computed inresponse to an irrevocable letter of credit designation.
 152. The methodof claim 151, wherein the step of programming includes programming thedigital electrical computer to electronically generate the illustrationincluding the amount of the mortgage being repaid by after-US-taxproceeds from a surrender of the life insurance policy.
 153. The methodof claim 151, wherein the step of programming includes programming thedigital electrical computer to electronically generate the illustrationincluding the amount of the mortgage being repaid by at least one loanfrom the life insurance policy.
 154. The method of claim 151, whereinthe step of programming includes programming the digital electricalcomputer to electronically generate the illustration including theamount of the mortgage being repaid by a death benefit of the lifeinsurance policy after a roll over of the mortgage.
 155. A method forelectronically producing an illustration of a cash value life insurancepolicy repaying an amount of a mortgage, the method comprising the stepof:programming a digital electrical computer operably connected to aterminal for receiving manually input information and for converting themanually input information into input data electronically conveyed tothe programmed digital electrical computer to process the input datainto output data and operably connected to a printer for printing theoutput data, the digital electrical computer being programmed tocompute, in response to an amount of a mortgage as a portion of theinput information, a Specified Amount of a life insurance policy forrepaying the amount of the mortgage, the life insurance policy having acash value at least partially collateralizing the amount of themortgage, and to electronically generate an illustration, including thelife insurance policy repaying the amount of the mortgage, as a portionof the output information.
 156. The method of claim 155, wherein thestep of programming includes programming the digital electrical computerto compute the Specified Amount in response to a minimum number ofpremium payments required by law to avoid treatment of the lifeinsurance policy as a modified endowment contract under US tax law. 157.The method of claim 155, further comprising the step of creating acentral database accessible to the programmed digital electricalcomputer, the central database into which borrower information andinsurance information, along with data representing lenders' respectivemortgage rates and the illustration, are written by the programmeddigital electrical computer and from which the borrower information, theinsurance information, the data, and the illustration are read by theprogrammed digital electrical computer.
 158. The method of claim 155,wherein the step of programming includes programming the digitalelectrical computer to output loan rate information at an output deviceoperably connected to the computer.
 159. The method of claim 155,wherein the step of programming includes programming the digitalelectrical computer to output insurance premium information at an outputdevice operably connected to the digital electrical computer.
 160. Themethod of claim 155, wherein the step of programming includesprogramming the digital electrical computer to be responsive to an inputdesignation representing a guarantor of the amount of the mortgage. 161.The method of claim 155, wherein the step of programming includesprogramming the digital electrical computer to receive data representingaverage loan rates and average closing costs.
 162. The method of claim155, wherein the step of programming includes programming the digitalelectrical computer to compute the Specified Amount as the greater ofthe amount of the mortgage and an amount in compliance with an InternalRevenue Service Code guideline for a minimum death benefit.
 163. Themethod of claim 155, wherein the step of programming includesprogramming the digital electrical computer to compute the SpecifiedAmount as not less than the amount of the mortgage.
 164. The method ofclaim 155, wherein the step of programming includes programming thedigital electrical computer to estimate a tax benefit to a borrower froma deductible interest expense of the amount of the mortgage, and toelectronically generate the illustration including the tax benefit. 165.The method of claim 155, wherein the step of programming includesprogramming the digital electrical computer to electronically generatethe illustration as a generic illustration, wherein the amount of themortgage is a standard amount.
 166. The method of claim 155, wherein thestep of programming includes programming the digital electrical computerto electronically generate the illustration including two insuredscovered by the insurance policy as a borrower and a co-borrower. 167.The method of claim 155, wherein the step of programming includesprogramming the digital electrical computer to electronically generatethe illustration including a second life insurance policy, therespective policies for separate insureds.
 168. The method of claim 155,wherein the step of programming includes programming the digitalelectrical computer to electronically generate the illustration whereinthe life insurance policy is a joint life insurance policy.
 169. Themethod of claim 155, wherein the step of programming includesprogramming the digital electrical computer to electronically generatethe illustration wherein the life insurance policy is a joint andsurvivor life insurance policy.
 170. The method of claim 155, whereinthe step of programming includes programming the digital electricalcomputer to compute, and to electronically generate the illustrationincluding, an amount of cash value for the life insurance policysufficient to repay the amount of the mortgage with after-US-taxproceeds from a surrender of the life insurance policy.
 171. The methodof claim 155, wherein the step of programming includes programming thedigital electrical computer to compute, and to electronically generatethe illustration including, an amount of cash value for the lifeinsurance policy sufficient to repay the amount of the mortgage with atleast one loan from the life insurance policy for use in conjunctionwith means for maintaining the life insurance policy until death. 172.The method of claim 155, wherein the step of programming includesprogramming the digital electrical computer to compute, and toelectronically generate the illustration including, an amount of cashvalue for the life insurance policy sufficient to repay the amount ofthe mortgage with a roll over of the mortgage for use in conjunctionwith a death benefit of the life insurance policy.
 173. The method ofclaim 155, wherein the step of programming includes programming thedigital electrical computer to compute, and to electronically generatethe illustration including an amount of cash value for the lifeinsurance policy sufficient to repay the amount of the mortgage by useof at least one loan from the life insurance policy to pay interest onthe amount of the mortgage.
 174. The method of claim 173, wherein thestep of programming includes programming the digital electrical computerto process the loans such that each has a spread between a loaned fundscredited rate of the life insurance policy and a policy loan rate of thelife insurance policy, the spread being less than 300 basis points. 175.The method of claim 155, wherein the step of programming includesprogramming the digital electrical computer to compute, and toelectronically generate a reillustration to reflect, a changed cashvalue amount of the life insurance policy at a time during the mortgage.176. The method of claim 155, wherein the step of programming includesprogramming the digital electrical computer to compute, and toelectronically generate the illustration including, an additional amountof insurance premium sufficient to maintain the cash value as projectedin the illustration.
 177. The method of claim 155, wherein the step ofprogramming includes programming the digital electrical computer tocompute an interest rate for the amount of the mortgage and a creditedrate for the life insurance policy, wherein the interest rate and thecredited rate are computed from one interest rate index.
 178. The methodof claim 177, wherein the step of programming includes programming thedigital electrical computer to compute the interest rate index.
 179. Themethod of claim 155, wherein the step of programming includesprogramming the digital electrical computer to print at the printer acustomized mortgage application form for the mortgage in response toreceipt of information used to produce the illustration and to receiptof input mortgage application form completion data.
 180. The method ofclaim 155, wherein the step of programming includes programming thedigital electrical computer to print at the printer a customized lifeinsurance policy application form for the life insurance policy inresponse to receipt of information used to produce the illustration andto receipt of input insurance application form completion data.
 181. Themethod of claim 155, wherein the step of programming includesprogramming the digital electrical computer to print at the printer acustomized brokerage account application form in response to receipt ofinformation used to produce the illustration and to receipt of inputbrokerage account application form completion data.
 182. The method ofclaim 155, wherein the step of programming includes programming thedigital electrical computer to electronically generate the illustrationin response to receipt of an input indication that the life insurancepolicy is a corporate-sponsored life insurance policy.
 183. The methodof claim 155, wherein the step of programming includes programming thedigital electrical computer to iteratively solve for an amount ofpremium necessary to accumulate sufficient cash value to repay theamount of the mortgage at a specified time.
 184. The method of claim155, wherein the step of programming includes programming the digitalelectrical computer to compute, in response to receipt of an inputdesignation of a higher up-front payment than a minimum amount ofpremium necessary to repay the amount of the mortgage, an allocation ofmonies to a down payment and to a premium payment and to electronicallygenerate the illustration including the allocation.
 185. The method ofclaim 155, wherein the step of programming includes the step ofprogramming the digital electrical computer to electronically generatethe illustration including a comparison of the mortgage with the lifeinsurance policy as collateral and a conventional mortgage.
 186. Themethod of claim 155, wherein the step of programming includesprogramming the digital electrical computer to electronically generatethe illustration including a comparison of after-US-tax cost of amonthly payment for the amount of the mortgage using the life insurancepolicy as collateral and a conventional mortgage.
 187. A method forusing a machine comprising a programmed digital electrical computer toproduce an illustration of collateral completely repaying an amount of amortgage, the method comprising the steps of:inputting an amount of amortgage to a digital electrical computer programmed to compute, inresponse to receipt of the amount of the mortgage, an amount ofcollateral sufficient for completely repaying the amount of themortgage; and generating with the programmed digital electrical computeran illustration including the collateral owned by a borrower, at leastpartially replacing a down payment, and completely repaying the amountof the mortgage.
 188. The method of claim 187, wherein the step ofgenerating is carried out with the digital electrical computer beingprogrammed to use the amount of collateral as a cash value lifeinsurance policy sufficient for repaying the amount of the mortgage,after a roll over of the mortgage, with a death benefit, and wherein theillustration includes the death benefit repaying the amount of themortgage.
 189. The method of claim 188, wherein the step of generatingis carried out with the digital electrical computer being programmed touse bracketing and iteration to find an initial premium amount for thelife insurance policy.
 190. The method of claim 189, wherein the step ofgenerating is carried out with the digital electrical computerprogrammed to compute an additional amount of insurance premiumsufficient to maintain the cash value of the life insurance policy asprojected in the illustration and to electronically generatedocumentation of the additional amount of insurance premium.
 191. Themethod of claim 187, wherein the step of generating is carried out withthe digital electrical computer being programmed to use the amount ofcollateral as an amount of a cash value life insurance policy sufficientfor repaying the amount of the mortgage with after-US-tax proceeds froma surrender of the life insurance policy, and wherein the illustrationincludes the proceeds repaying the amount of the mortgage.
 192. Themethod of claim 191, wherein the step of generating is carried out withthe digital electrical computer programmed to use bracketing anditeration to find an initial premium amount for the life insurancepolicy.
 193. The method of claim 192, wherein the step of generating iscarried out with the digital electrical computer programmed to computean additional amount of insurance premium sufficient to maintain thecash value of the life insurance policy as projected in the illustrationand to electronically generate documentation of the additional amount ofinsurance premium.
 194. The method of claim 187, wherein the step ofgenerating is carried out with the digital electrical computerprogrammed to compute the amount of the collateral being an amount of acash value life insurance policy sufficient for repaying the amount ofthe mortgage with a loan from the life insurance policy, the lifeinsurance policy for use in conjunction with means for maintaining thelife insurance policy until the borrower's death, and wherein theillustration includes the loan from the life insurance policy repayingthe amount of the mortgage.
 195. The method of claim 194, wherein thestep of generating is carried out with the digital electrical computerbeing programmed to use the loan as computed to have a spread between aloaned funds credited rate of the life insurance policy and a policyloan rate of the life insurance policy, the spread being less than 300basis points.
 196. The method of claim 194, wherein the step ofgenerating is carried out with the digital electrical computerprogrammed to use bracketing and iteration to find an initial premiumamount for the life insurance policy.
 197. The method of claim 196,wherein the step of generating is carried out with the digitalelectrical computer programmed to compute an additional amount ofinsurance premium sufficient to maintain the cash value of the lifeinsurance policy as projected in the illustration and to electronicallygenerate documentation of the additional amount of insurance premium.198. The method of claim 187, wherein the step of generating is carriedout with the digital electrical computer programmed to compute theamount of the collateral as an amount of a cash value life insurancepolicy sufficient to repay the amount of the mortgage using loans fromthe life insurance policy sufficient to pay interest on the amount ofthe mortgage and a death benefit of the life insurance policy sufficientto repay principal on the amount of the mortgage, the life insurancepolicy for use in conjunction with means for maintaining the lifeinsurance policy until the borrower's death, and wherein theillustration includes repaying the principal on the amount of themortgage with the death benefit.
 199. The method of claim 198, whereinthe step of generating is carried out with the digital electricalcomputer being programmed to use the loans as computed as so that eachhas a spread between a loaned funds credited rate of the life insurancepolicy and a policy loan rate of the life insurance policy, the spreadbeing less than 300 basis points.
 200. The method of claim 198, whereinthe step of generating is carried out with the digital electricalcomputer programmed to use bracketing and iteration to find an initialpremium amount for the life insurance policy.
 201. The method of claim200, wherein the step of generating is carried out with the digitalelectrical computer programmed to compute an additional amount ofinsurance premium sufficient to maintain the cash value of the lifeinsurance policy as projected in the illustration and to electronicallygenerate documentation of the additional amount of insurance premium.202. A method for using a machine comprising a programmed digitalelectrical computer to produce an illustration of an amount of aninvestment repaying an amount of a US mortgage, the method comprisingthe steps of:entering an amount of a mortgage into a digital electricalcomputer programmed to receive the amount from a terminal; generating,in response to receipt of the amount, an illustration including aninvestment for repaying the amount of the mortgage, wherein the mortgageis a mortgage as defined under US law, and wherein the digitalelectrical computer is not programmed to generate the illustration asincluding a mortgage plan having a cost containment clause; and printingthe illustration at a printer.
 203. The method of claim 202, wherein thestep of generating is carried out with the digital electrical computerprogrammed to electronically generate data for a Truth in Lendingdisclosure.
 204. The method of claim 203, wherein the step of generatingis carried out with the digital electrical computer programmed to updatethe illustration after the illustration has been stored in a databaseaccessible to the programmed digital electrical computer.
 205. Themethod of claim 204, wherein the step of generating is carried out withthe digital electrical computer programmed to electronically generatethe illustration including an amount of the investment sufficient tocompletely repay the amount of the mortgage.
 206. The method of claim203, wherein the step of generating is carried out with the digitalelectrical computer programmed to convey electronic mail to and fromeach of a plurality of digital electrical computers operably connectedto the programmed digital electrical computer to obtain theillustration.
 207. The method of claim 206, wherein the step ofgenerating is carried out with the digital electrical computerprogrammed to offer hypertext-linked help at each of the plurality ofdigital electrical computers.
 208. The method of claim 202, wherein thestep of generating is carried out with the digital electrical computerprogrammed to link to one of a plurality of digital electrical computersof respective life insurance carriers via respective open-end networkgateways and to obtain insurance information to customize theillustration in response to a selection of a life insurance policyoffered by one of the carriers as the investment.
 209. The method ofclaim 202, wherein the step of generating is carried out with thedigital electrical computer programmed to link to one of a plurality ofdigital electrical computers of respective lenders via respectiveopen-end network gateways and to obtain mortgage information tocustomize the illustration in response to a selection of a mortgageoffered by one of the lenders.
 210. The method of claim 202, wherein thestep of generating is carried out with the digital electrical computerprogrammed to link to a plurality of digital electrical computers ofrespective securities brokers via respective open-end network gatewaysand to obtain securities information to customize the illustration inresponse to a selection of a security offered by one of the securitiesbrokers as the investment.
 211. The method of claim 202, wherein thestep of generating is carried out with the digital electrical computerprogrammed to receive selection criteria for the investment and, inresponse to receipt of the criteria, to find the best investment from aplurality of investments.
 212. The method of claim 202, wherein the stepof generating is carried out with the digital electrical computerprogrammed to receive selection criteria for the mortgage and, inresponse to receipt of the criteria, to find the best mortgage from aplurality of mortgages.
 213. The method of claim 202, wherein theinvestment is a cash value life insurance policy, and wherein the stepof generating is carried out with the digital electrical computerprogrammed to receive selection criteria for the life insurance policyand, in response to receipt of the criteria, to find the best lifeinsurance policy from a plurality of life insurance policies.
 214. Themethod of claim 213, wherein the step of generating is carried out withthe digital electrical computer being responsive to a designationrepresenting a corporate-sponsored purchase of the life insurancepolicy.
 215. The method of claim 202, wherein the illustrationelectronically generated by the programmed digital electrical computerincludes an amount of the investment for use as collateral for themortgage.
 216. The method of claim 202, wherein the investment is a cashvalue life insurance policy, and wherein the step of generating iscarried out with the digital electrical computer programmed toelectronically generate the illustration including the amount of themortgage being repaid by after-US-tax proceeds from a surrender of thelife insurance policy.
 217. The method of claim 202, wherein theinvestment is a cash value life insurance policy, and wherein the stepof generating is carried out with the digital electrical computerprogrammed to electronically generate the illustration including theamount of the mortgage being repaid by at least one loan from the lifeinsurance policy.
 218. The method of claim 202, wherein the investmentis a cash value life insurance policy, and wherein the step ofgenerating is carried out with the digital electrical computerprogrammed to electronically generate the illustration including theamount of the mortgage being repaid by a death benefit of the lifeinsurance policy after a roll over of the amount of the mortgage. 219.The method of any one of claims 216, 217, or 218, wherein the step ofgenerating is carried out with the digital electrical computerprogrammed to electronically generate the illustration including thelife insurance policy having a premium structure computed for a lump-sumprepayment of the life insurance policy.
 220. The method of any one ofclaims 216, 217, or 218, wherein the step of generating is carried outwith the digital electrical computer programmed to electronicallygenerate the illustration including the life insurance policy havingcorporate-guaranteed premium payments.
 221. The method of claim 216,217, or 218, wherein the step of generating is carried out with thedigital electrical computer programmed to electronically generate theillustration including the life insurance policy having premium paymentssecured by an irrevocable letter of credit.
 222. The method of claim202, wherein the investment is a cash value life insurance policy, andwherein the step of generating is carried out with the digitalelectrical computer programmed for generating the illustration as ageneric illustration including the amount of the mortgage using the lifeinsurance policy as collateral for a standard amount of the mortgage.223. The method of claim 202, wherein the step of generating is carriedout with the digital electrical computer programmed to obtain, ingenerating the illustration as a generic illustration, data representingaverage loan rates and average closing costs.
 224. The method of claim223, wherein the step of generating is carried out with the digitalelectrical computer programmed for adjusting any of the data to reflectan input value.
 225. The method of claim 202, wherein the step ofgenerating is carried out with the digital electrical computerprogrammed for computing an interest for the mortgage and a creditedrate for the life insurance policy, wherein the rates are computed fromone interest rate index.
 226. The method of claim 225, wherein the stepof generating is carried out with the digital electrical computerprogrammed for computing the interest rate index.
 227. The method ofclaim 202, wherein the method further comprises the step of generating areillustration with the programmed digital electrical computer, at atime during the mortgage, to reflect a changed monthly mortgage payment.228. The method of claim 202, wherein the investment is a cash valuelife insurance policy, and wherein the step of generating is carried outwith the digital electrical computer programmed for computing, andgenerating the illustration showing, an additional amount of insurancepremium sufficient to maintain cash value of the life insurance policyas projected in the illustration.
 229. The method of claim 228, whereinthe step of generating is carried out with the digital electricalcomputer programmed for outputting loan/insurance product information atan output device operably connected to the digital electrical computer.230. The method of claim 228, wherein the step of generating is carriedout with the digital electrical computer programmed for outputting loanrate information at an output device operably connected to the digitalelectrical computer.
 231. The method of claim 228, wherein the step ofgenerating is carried out with the digital electrical computerprogrammed for outputting insurance premium information at an outputdevice operably connected to the digital electrical computer.
 232. Themethod of claim 228, wherein the step of generating is carried out withthe digital electrical computer programmed for receiving input mortgageapplication information and, in response thereto, generating with thedigital electrical computer a customized mortgage application form forthe mortgage.
 233. The method of claim 228, wherein the step ofgenerating is carried out with the digital electrical computerprogrammed for receiving input health information for insuranceunderwriting.
 234. The method of claim 228, wherein the step ofgenerating is carried out with the digital electrical computerprogrammed for receiving input insurance application information and, inresponse thereto, generating with the digital electrical computer acustomized life insurance application form for the life insurancepolicy.
 235. The method of claim 228, wherein the step of generating iscarried out with the digital electrical computer programmed forreceiving input brokerage account information and, in response thereto,generating with the digital electrical computer a customized brokerageaccount application form.
 236. The method of claim 202, wherein theinvestment is a cash value life insurance policy, and wherein the stepof generating is carried out with the digital electrical computerprogrammed for bracketing and iteratively solving for an amount ofpremium for the life insurance policy necessary to accumulate sufficientcash value to repay the amount of the mortgage at a specified time. 237.The method of claim 236, wherein the step of generating is carried outwith the digital electrical computer programmed for computing inresponse to receipt of an input designation of a higher up-front paymentthan the amount of the cash value solved for, an allocation of monies toa down payment amount and to the amount of the life insurance premium,and wherein the illustration includes the allocation.
 238. The method ofclaim 228, wherein the step of generating is carried out with thedigital electrical computer programmed for generating the illustrationincluding a comparison of the mortgage and a conventional mortgage. 239.The method of claim 228, wherein the step of generating is carried outwith the digital electrical computer programmed for generating theillustration including a comparison of after-US-tax cost of a monthlypayment for the amount of the mortgage with the investment as collateraland a conventional mortgage.
 240. The method of claim 202, wherein thestep of generating is carried out with the digital electrical computerprogrammed for generating the illustration including the investmentowned by a borrower.
 241. The method of claim 202, wherein the step ofgenerating includes generating the illustration wherein the investmentis in a US-tax-favored investment plan.
 242. The method of claim 202,wherein the step of generating includes generating the illustrationwherein the investment is in an individual retirement account investmentplan.
 243. The method of claim 202, wherein the step of generatingincludes generating the illustration wherein the investment is in aKeough investment plan.
 244. The method of claim 202, wherein the stepof generating includes generating the illustration wherein theinvestment is in a 401K plan.
 245. The method of claim 202, wherein thestep of generating includes generating the illustration wherein theinvestment is in a profit sharing plan.
 246. The method of claim 202,wherein the step of generating includes generating the illustrationwherein the investment is not in a US-tax-favored investment plan. 247.The method of any one of claims 202, or 241-246, wherein the step ofgenerating is carried out with the investment being a security.
 248. Themethod of any one of claims 202, or 241-246, wherein the step ofgenerating is carried out with the investment being a life insurancepolicy.
 249. The method of any one of claims 202, or 241-246, whereinthe step of generating is carried out with the investment being anannuity.
 250. A method for using a machine to electronically generate anillustration of an amount of a security repaying an amount of amortgage, the method comprising the steps of:entering an amount of amortgage into a digital electrical computer programmed to receive theamount from a terminal; generating, in response to receipt of theamount, an illustration including a security as an investment repayingthe amount, wherein the digital electrical computer is not programmed togenerate the illustration including a mortgage plan having a costcontainment clause; and printing the illustration at a printer.
 251. Themethod of claim 250, wherein the step of generating includes generatingthe illustration including the security used in conjunction with termlife insurance for repaying the amount of the mortgage.
 252. The methodof claim 250, wherein the step of generating includes generating theillustration including the security as a zero coupon bond.
 253. Themethod of claim 250, wherein the step of generating includes generatingthe illustration including the security as a zero coupon bond, the zerocoupon bond being a US Treasury derivative.
 254. The method of claim250, wherein the step of generating includes generating the illustrationincluding the security as a zero coupon bond, the zero coupon bond beinga municipal bond derivative.
 255. The method of claim 250, wherein thestep of generating includes generating the illustration including thesecurity being as at least one share in a mutual fund.
 256. A method forusing a machine to electronically generate an illustration of an amountof a life insurance policy repaying an amount of a mortgage, the methodcomprising the steps of:entering an amount of a mortgage into a digitalelectrical computer programmed to receive the amount from a terminal;generating, in response to receipt of the amount, an illustrationincluding an amount of a life insurance policy as an investment repayingthe amount of the mortgage; wherein the digital electrical computer isnot programmed to generate the illustration for a mortgage plan having acost containment clause; and printing the illustration at a printer.257. The method of claim 256, wherein the step of generating is carriedout with the life insurance policy being a term life insurance policy.258. The method of claim 256, wherein the step of generating is carriedout with the life insurance policy being a permanent life insurancepolicy.
 259. The method of claim 256, wherein the step of generating iscarried out with the life insurance policy being a universal lifeinsurance policy.
 260. The method of claim 258, wherein the step ofgenerating is carried out with the life insurance policy being a singlepolicy providing a death benefit for two insureds, at least one of theinsureds being a borrower under the mortgage.
 261. The method of claim260, wherein the step of generating is carried out with the lifeinsurance policy being a joint life insurance policy.
 262. The method ofclaim 260, wherein the step of generating is carried out with the lifeinsurance policy being a joint and survivor life insurance policy. 263.The method of claim 258, wherein the step of generating is carried outwith the digital electrical computer programmed to electronicallygenerate the illustration including the amount of the life insurancepolicy for a borrower, and a second amount of a life insurance policyfor a second insured, such that combined death benefits of the lifeinsurance policies are sufficient to repay the amount of the mortgageand such that combined cash values of the life insurance policies aresufficient to repay the amount of the mortgage.
 264. The method of claim258, wherein the step of generating is carried out with the lifeinsurance policy being a variable life insurance policy.
 265. The methodof claim 258, wherein the step of generating is carried out with thelife insurance policy having at least one rider.
 266. The method ofclaim 258, wherein the step of generating is carried out with the lifeinsurance policy having a disability rider.
 267. The method of claim258, wherein the step of generating is carried out with the lifeinsurance policy having an income rider.
 268. The method of claim 258,wherein the step of generating is carried out with the digitalelectrical computer programmed to iteratively solve for an initialpremium amount for the life insurance policy.
 269. The method of claim268, wherein the step of generating is carried out with the digitalelectrical computer programmed to compute a Specified Amount of the lifeinsurance policy providing an amount of life insurance sufficient forrepaying the amount of the mortgage, and wherein the illustrationincludes the Specified Amount.
 270. The method of claim 269, wherein thestep of generating is carried out with the digital electrical computerprogrammed to test the Specified Amount against an amount computed usingan Internal Revenue Service Code definition of life insurance.
 271. Themethod of claim 270, wherein the step of generating is carried out withthe digital electrical computer programmed to test the Specified Amountagainst an amount computed using a Guideline Level Premium.
 272. Themethod of claim 270, wherein the step of generating is carried out withthe digital electrical computer programmed to test the Specified Amountagainst an amount computed using a Guideline Seven Pay Premium.
 273. Themethod of claim 270, wherein the step of generating is carried out withthe digital electrical computer programmed to test the Specified Amountagainst an amount computed using a Guideline Single Premium.
 274. Themethod of claim 270, wherein the step of generating is carried out withthe digital electrical computer programmed to compute the SpecifiedAmount as not less than the amount of the mortgage.
 275. The method ofclaim 268 wherein the step of generating is carried out with the digitalelectrical computer programmed to compute an amount of death benefitwhich is in compliance with an Internal Revenue Service Code ratio ofinsurance cash value to death benefit.
 276. The method of claim 268,wherein the step of generating is carried out with the digitalelectrical computer programmed to compute an after-US-tax cash surrendervalue of the life insurance policy for the last month of the mortgage asnot less than the amount of the mortgage.
 277. The method of claim 268,wherein the step of generating is carried out with the digitalelectrical computer programmed to compute an end of month life insurancecash value and an amount of a loan from the life insurance policy in thebeginning of a month.
 278. The method of claim 268, wherein the step ofgenerating is carried out with the digital electrical computerprogrammed to compute a loan from the life insurance policy equal to theamount of the mortgage.
 279. The method of claim 268, wherein the stepof generating is carried out with the digital electrical computerprogrammed to compute an end of month cash value of the life insurancepolicy as always greater than total loans from the life insurance policyin any month through each year of the illustration.
 280. The method ofclaim 268, wherein the step of generating is carried out with thedigital electrical computer programmed to compute an amount of deathbenefit which, in all years in the mortgage, is not less than the sum ofthe amount of the mortgage and a loan balance of the life insurancepolicy, including accrued interest, in any month through each year ofthe illustration.
 281. The method of claim 268, wherein the step ofgenerating is carried out with the digital electrical computerprogrammed to compute an amount of a life insurance policy loan in anymonth equal to the amount of the mortgage multiplied by an annualinterest rate charged for the amount of the mortgage.
 282. The method ofclaim 268, wherein the step of generating is carried out with thedigital electrical computer programmed to compute an amount of interestcredited on the life insurance policy as including a rate of interestcredited on the life insurance policy multiplied by a loan balance ofthe life insurance policy, including accrued interest.
 283. The methodof claim 268, wherein the step of generating is carried out with thedigital electrical computer programmed to compute an annual amount ofpremium for the life insurance policy.
 284. The method of claim 268,wherein the step of generating is carried out with the digitalelectrical computer programmed to compute a schedule of premium paymentamounts for the life insurance policy, such that the life insurancepolicy is not a modified endowment contract.
 285. The method of claim268, wherein the step of generating is carried out with the digitalelectrical computer programmed to compute, and wherein the illustrationincludes, the amount of the premium for the life insurance policy as atleast partially replacing an amount of a down payment for a mortgage.286. The method of claim 268, wherein the step of generating is carriedout with the digital electrical computer programmed to compute theinitial premium amount for the life insurance policy and to compute anamount of an up-front payment which includes the initial premium amountcombined with an amount for purchasing an annuity, the annuity beingsufficient to pay scheduled premiums for the life insurance policy for aspecified number of years.
 287. The method of claim 285, wherein thestep of generating is carried out with the digital electrical computerprogrammed to compute an up-front payment amount for the mortgage basedon: an annual payment for an annuity, the annual payment being equal tothe initial premium amount; a specified number of payments for theannuity; an annual credited rate of the annuity expressed as apercentage; a monthly interest rate of the annuity; a total percentageof initial expense charged by a carrier; a number of months in theannuity; and a total of fixed charges by the carrier taken from a cashbalance of the annuity in any given month.
 288. A method for using amachine to produce an illustration of an amount of an annuity repayingan amount of a mortgage, the method comprising the steps of:entering anamount of a mortgage into a digital electrical computer programmed toreceive the amount from a terminal; generating, in response to receiptof the amount, an illustration including an amount of an annuity as aninvestment repaying the amount of the mortgage, wherein the digitalelectrical computer is not programmed to generate the illustration asincluding a mortgage plan having a cost containment clause; and printingthe illustration at a printer.
 289. The method of claim 288, wherein thestep of generating is carried out with the digital electrical computerprogrammed to compute the amount of the annuity as an amount of animmediate annuity.
 290. The method of claim 288, wherein the step ofgenerating is carried out with the digital electrical computerprogrammed to compute the amount of the annuity as an amount of animmediate annuity used in conjunction with a term life insurance policyfor repaying the amount of the mortgage.
 291. The method of claim 288,wherein the step of generating is carried out with the digitalelectrical computer programmed to compute the amount of the annuity asan amount of an immediate annuity for paying interest on the amount ofthe mortgage.
 292. The method of claim 288, wherein the step ofgenerating is carried out with the digital electrical computerprogrammed to compute the amount of the annuity as an amount of animmediate annuity used in conjunction with a term life insurance policyfor repaying the amount of the mortgage, and wherein the amount of themortgage is an amount of a home equity mortgage.
 293. The method ofclaim 288, wherein the step of generating is carried out with thedigital electrical computer programmed to compute the amount of theannuity as an amount of a deferred annuity.
 294. The method of claim288, wherein the step of generating is carried out with the digitalelectrical computer programmed to compute the amount of the annuity asan amount of a deferred annuity used in conjunction with a term lifeinsurance policy for repaying the amount of the mortgage.
 295. Themethod of claim 293, wherein the step of generating is carried out withthe digital electrical computer programmed to compute the amount of theannuity as an amount of a single premium deferred annuity.
 296. Themethod of claim 293, wherein the step of generating is carried out withthe digital electrical computer programmed to compute the amount of theannuity as an amount of a level premium deferred annuity.
 297. Themethod of claim 293, wherein the step of generating is carried out withthe digital electrical computer programmed to compute the amount of theannuity as an amount of a variable premium deferred annuity.
 298. Themethod of any one of claims 250, 256, or 288, wherein the step ofgenerating is carried out with the amount of the mortgage as an amountof a first mortgage.
 299. The method of any one of claims 250, 256, or288, wherein the step of generating is carried out with the amount ofthe mortgage as an amount of a home equity mortgage.
 300. The method ofany one of claims 250, 256, or 288, wherein the step of generating iscarried out with the amount of the mortgage as an amount of a balloonpayment mortgage.
 301. The method of any one of claims 250, 256, or 288,wherein the step of generating is carried out with the amount of themortgage as an amount of a fixed interest mortgage.
 302. The method ofany one of claims 250, 256, or 288, wherein the step of generating iscarried out with the amount of the mortgage as an amount of a variableinterest mortgage.
 303. The method of any one of claims 250, 256, or288, wherein the step of generating is carried out with the digitalelectrical computer programmed to compute amortization of the amount ofthe mortgage when interest rates are low, and negative amortization ofthe mortgage when interest rates are high, such that earnings on theinvestment are an offset to the negative amortization.
 304. A machinefor producing an illustration of an investment for repaying an amount ofa mortgage, the machine comprising:a terminal and a printer eachoperably connected to a digital electrical computer programmed toelectronically generate, in response to an amount of a mortgage input atthe terminal and a selection input at the terminal of an investment madefrom any two of the investments of a group consisting of a lifeinsurance policy, a security, and an annuity, as collateral owned by aborrower under the mortgage, an illustration including the selectedinvestment repaying the mortgage amount.
 305. The machine of claim 304,wherein the selection is made from all three of the group.
 306. Themachine of claim 304, wherein the selection includes a second investmentselected from all three of the group.
 307. A method for using a machinefor producing an illustration of an investment for repaying an amount ofa mortgage, the method comprising:entering an amount for a mortgage at aterminal to be electronically conveyed to a digital electrical computerprogrammed to compute, in response to receipt of the entered amount forthe mortgage and a selection of an investment made at the terminal, theselection made from any two of the investments from a group consistingof a life insurance policy, a security, and an annuity, as collateralrepaying the amount of the mortgage; and generating with the digitalelectrical computer an illustration including the selected investment ascollateral repaying the amount of the mortgage for printing at aprinter.
 308. The machine of claim 307, wherein the selection is madefrom all three of the group.
 309. The machine of claim 307, wherein theselection includes a second investment selected from all three of thegroup.